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Yahoo CEO belittles Google's expansion efforts

Yahoo  Chairman Terry Semel belittled rival Google Inc.'s recent efforts to expand beyond its leading Internet search engine.
/ Source: The Associated Press

Yahoo Inc. Chairman Terry Semel belittled rival Google Inc.'s recent efforts to expand beyond its leading Internet search engine, describing the diversification as a haphazard attempt to catch up with his company.

"So far they don't seem to have a plan, but maybe they do," Semel said Thursday during a question-and-answer session at an Internet conference. "Maybe magic will happen tomorrow."

Earlier in the conversation, Semel praised Google's online search prowess, hailing the company as a pioneer in that field.

But then he noted that Google seems to be following in Yahoo's footsteps by adding an array of new products like e-mail, photo sharing, social networking, personalized home pages and voice communications.

The additional features, Semel said, have made Google "look more and more like a portal. And as a portal, it probably would be rated No. 4."

Semel didn't specify which portals he considered to be superior, but he most likely was referring to Yahoo, Microsoft Corp.'s MSN and Time Warner Inc.'s AOL. All three of those sites are built around a mixture of e-mail, news, entertainment and e-commerce that consistently ranks them among the most popular destinations on the Web.

(MSNBC content is distributed by MSN. MSNBC itself is a Microsoft - NBC joint venture.)

Asked to respond to Semel's remarks, Google spokeswoman Lynn Fox said: "We appreciate recognition of Google's leadership in search. It's a highly competitive industry, and that ultimately benefits users."

Although Yahoo's competition with Google has been heating up during the past two years, Semel generally has avoided public comments about his rival.

Semel's restraint contrasts with the more confrontational approach of Microsoft's top executives. Both Chairman Bill Gates and CEO Steve Ballmer have depicted Google as the equivalent of a one-trick pony likely to face a rough road.

Google so far has continued its online search engine dominance while rolling out new products that loom as possible threats to both Yahoo and Microsoft.

Through August, Google controlled 37.3 percent of the U.S. search market, up from 36.1 percent at the same time last year, according to comScore Media Metrix. Meanwhile, Yahoo's share dipped to 29.7 percent from 30.6 percent a year ago.

With so much advertising now tied to online search requests, Google has capitalized on its market-leading position to outpace Yahoo's recent earnings growth.

Investors apparently like Google's strategy.

Google's stock has increased by more than 60 percent so far this year, propelling its market value to $91 billion. Yahoo's stock, in contrast, has dropped by 10 percent so far this year, leaving its market value at $48 billion.

Semel told Thursday's audience that he believes Yahoo ultimately will be rewarded for its more diversified approach to the Internet. "This is a marathon run, not a sprint," he said.