Back to Innovation? Scott Thompson's First Shameful Move

By Sarah Lacy , written on February 27, 2012

From The News Desk

Wow. I didn't think Yahoo could do it, but it may have just fallen further in Silicon Valley's esteem. It's gone from Silicon Valley punching bag to something even more reviled, a patent troll.

Yahoo has served Facebook with notice that the company may be infringing on 10 to 20 patents. The story was broken by the New York Times. In fact, according to Facebook, the Times found out about it at roughly the same time Facebook did. "Yahoo contacted us at the same time they called the New York Times and so we haven't had the opportunity to fully evaluate their claims," said a Facebook spokesperson in the company's statement.

If Yahoo was making a legitimate claim on patent infringement, my guess is that they would have offered to reach a settlement. The fact that they've waited until Facebook filed to go public and entered its quiet period, and then handed the story to the New York Times, signals something very different. Perhaps Yahoo is following the advice of activist hedge funds, who've said that the company should use their huge patent portfolio to hobble more relevant, innovative and successful competitors.

Really? We're doing this now, Yahoo? You've basically just capitulated to being Wall Street's bitch in one swift move. This blunder is tantamount to a throwing up of hands in defeat. We can't win on technology, so let's just scrap Yahoo for parts and see what the lawyers can get for them.

It's a new low, even for a has-been portal.

Besides being slimy, this move is just plain stupid. The growth in Yahoo news is heavily dependent on recent integration with Facebook. Traffic has grown three and half times since the integration, according to a source, which Yahoo's Mike Kerns went on and on about here. Facebook mobile has also been pushing traffic to Yahoo's mobile news app, driving traffic up three and half times there as well in just the last two weeks to some 1.6 million visitors a day. Facebook talked about those results here. "These numbers show that this is a strategy that Yahoo should expand on," Scoble wrote about the news integration. Yeah, that or bite the hand that is feeding them.

What happened to Yahoo? We knew it was a troubled company, but this? I'm particularly disappointed that this is the first big move by Yahoo's new CEO Scott Thompson, who was supposed to be an upgrade from Carol Bartz when it came to technology-chops. He trumpeted to Forbes in one of his first interviews that Yahoo would be "back to innovation." Guess he hasn't found much inside the company, so he's going this route instead.

If you weren't shorting Yahoo's stock already, start now.