Jerry Yang, who co-founded Yahoo in 1995, is stepping down after 17 challenging months as CEO. Yang, 40, will remain CEO until his replacement is hired and then revert to his previous advisory role of “Chief Yahoo.”Yang Steps Down

Failed Microsoft Buyout

Things became particularly interesting for Yang about six months back, when Microsoft attempted an unsolicited buyout for roughly $33 per share, which was a generous premium to Yahoo’s $19 stock price at that time.  Unfortunately for Yahoo shareholders, at least in the short term, Yang vocally resisted this opportunity and took measures to ensure that it would not come to be. Today, Yahoo’s stock price sits under $9 per share just six months later, the lowest level since 2003.

Microsoft might come back to the table, but just yesterday Steve Ballmer said, “We’ve moved on,” during a shareholder meeting in Bellevue, Washington. He reiterated that a partnership between Microsoft and Yahoo in the Internet-search market is “an interesting possibility.” However, Ballmer added that there are no talks about such a partnership at this time.

Google Backs Out of Partnership

Some are speculating that the final blow to Yang recently came from Google, who backed out of a proposed ad partnership to avoid a potential anti-trust battle with the Justice Department.

YouTube Surpasses Yahoo

Earlier this week, Comscore data revealed that YouTube surpassed Yahoo as the second most popular search service, receiving 2.6 billion search queries in August, 2008 compared to Yahoo’s 2.4 billion queries. The rapidly growing online video marketplace represents yet another area that Google dominates.

In a memo emailed to Yahoo employees Monday announcing his resignation, Yang wrote, “All of you know that I have always, and will always bleed purple. I will always do what I think is right for this great company. While this step will be an adjustment for all of us, I know it’s the right one.”

Yahoo needs to do something in order to prevent their one time search engine dominance from deteriorating into obscurity. Yahoo still boasts 500 million users worldwide, but increasingly every month, more and more are turning to Google for their search needs.

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