Yahoo’s Asian Exit Signals Changing Strategies for Internet Giants

By the end of the year, Yahoo (NASDAQ:YHOO) will be shutting down its South Korean web portal and Internet advertising business, marking the first Asian market that the company is leaving. Mobile adoption and local Korean competition, coupled with restructuring efforts back home, are likely to blame for the decline of Yahoo Korea.

“The Korean operation has been faced with a lot of challenges and has slowed Yahoo’s overall business growth for the past few years,” Yahoo Korea said in statement on Friday, according to the Wall Street Journal. The closure of Yahoo Korea reflects the broader challenges Yahoo faces in its turn-around effort.

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According to data from eMarketer, as recently as 2010, Yahoo was the share leader for display ad revenue. In 2011, the company was dethroned by Facebook (NASDAQ:FB), which is in turn expected to be dethroned by Google (NASDAQ:GOOG) in 2012. The report suggests that Yahoo’s share will continue to decline alongside another giant — Microsoft (NASDAQ:MSFT). Both companies are looking at their web portals as ways to revitalize their images and attract more visitors. Yahoo’s infamous homepage is scheduled for a makeover that will emphasize search and the “news feed” structure that has become a staple of sites like Twitter and Facebook.

Microsoft’s MSN site will also be getting a makeover for the upcoming Windows 8 platform. Both companies recognize the value in becoming a gateway to the rest of the Internet, a position Google has successfully capitalized on. More visitors means more ad revenue and more search engine traffic. The goal for each company is to bring users into the ecosystem. The tech giants offer many similar services and pull substantial value from user loyalty: a staunch user of the Office Suite could be more likely to adopt new Microsoft technology like the Surface and Windows 8, where a staunch Googler may opt for a Chromebook, to maximize synergies.

On October 15, Yahoo CEO Marissa Mayer, back to work after a two-week maternity leave, named Henrique de Castro, another ex-Googler, as chief operating officer.

The company is slated to release third-quarter earnings on October 22.

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