Opinion | Is Yahoo preparing for China exit?
Yahoo's shuttering of its China music service could reflect a broader re-evaluation of its global assets, which could end with a complete withdrawal from China next year.
The headlines have been buzzing this week with word that tarnished former Internet titan Yahoo (Nasdaq: YHOO) will shutter its Chinese Internet music service, with many pointing out the move reflects a broader reshuffling in the online music space. But from my perspective, the much more intriguing question is whether this move represents the first small step before Yahoo withdraws from the market completely – a step that seems increasingly likely as it focuses on turning around its core US search business.
All that sounds interesting and legitimate enough, but from my perspective this particular move by Yahoo looks like it could perhaps be part of a broader strategic re-evaluation of its global operations that is now taking place under its new CEO. That new chief executive, Marissa Mayer, took over at the helm of Yahoo earlier this year with the difficult task of turning around a company that pioneered the Internet search space but has lost its direction in the last five years as it was overtaken by Google.
We saw a similar re-evaluation take place nearly a decade ago, when Time Warner's (NYSE: TWX) former high-flying AOL unit abruptly withdrew from China and Asia after the Internet bubble burst. In this case, Yahoo came to China with big fanfare about a decade ago, when it instantly became the country's leading search company with its purchase of the leading local search engine at that time.
But Yahoo's business rapidly lost market share to Google and a fast-rising Baidu, which went on to become the nation's dominant player with more than two-thirds of the market. In the meantime, Yahoo formed a tie-up with Chinese e-commerce leader Alibaba, which also tried but failed to reinvigorate the company's search business.