CIOL: What is the philosophy behind the open strategy or is it just another strategy?

David Filo: In some ways we have been open in different ways probably since the beginning of Yahoo. The Internet was a very open network compared to the proprietary networks before the Internet and the web is a very open system. And so we are part of that and this notion of openness sort of cut a chord to what we
are doing. Opensource, ofcourse we built a lot of the company on Opensource and we are big part of that community. What open is to yahoo kind of continually changed so if you look at our services that used to be that, if you want to use my yahoo page or the front page, you would only get yahoo content. Several years ago that changed through simple RSS feeds. In advertising we had our employees only sold yahoo inventory that changed a lot, advertising networks have become much more evolved. You can buy and sell pretty much anywhere, a lot of these things revolve around the open strategy. We have evolved pretty much and I guess what is new is that in the last 6 to 9 months we have made open a core part of our strategy.

We just got and elevated it to a point to say that this really is core to the company’s strategy today. And so in some way its like acknowledging where the company has headed but it really help us crystallize what we are trying to do and it also helps us to get even more momentum behind it. So, everybody in the company knows that there are all these different, things are happening in open space but we actually are committed to that at a very highest level and it is a part of our core strategy, hence because of that we could just accelerating all these things. So in the future you are going to see much more openness surround our advertising firms.  So open exchange is open on a market place for advertising, our products would be much worth it. So, today if you come to Yahoo front page, you already can click on things that are going off the yahoo, unto your times, unto most regions etc. which you see it has open up even more, if you look at something like yahoo search that’s all you have been opened up in many ways, do things like search monkey and her boss initiative which is really opening up the core search infrastructure in allowing other companies, university students to build on top of our infrastructure, on top of this open search platform. And so you are going to see a lot of third party products been immigrated into these new APIs and things been focused after that. A lot of this hack day is about Y!OS and a lot of new APIs that we are talking about through that. And always we have been a part of this open strategy that has been ruminating for no. of years and kind of finally coming together under this open umbrella and we are trying to  create a consistent    strategy a consistent set of interfaces and stuff.  

CIOL: Going forward how do you see it impacting the Internet industry?

DF: I think in general Internet is becoming more open and we are part of that, I think in some ways we are a kind of leading that effort.  Things like search, is really the first major search provider to open up are infrastructure something like BOSS that allows like people to build entire services on top of infrastructure.  So we think that is a general direction that the Internet has headed and the reason for it is that it really does move the industry forward in much faster rate.  People can build on top of what’s already been built. If you look at what our search infrastructure looks like, its hundred and millions of dollars that has been spent on that. We have spent thousands and thousands of man hours building the infrastructure behind that and for a researcher or for a startup, the cost would be prohibitive; the time would be prohibitive in order to really create something.  And we think by opening things up it really moves industry that much faster.  We think innovation is a good. That’s what industry decided we want to be at the core front of that. So we take a lot of initiatives which are not just important to us but important to the industry.  I think we will see a lot of industry following soon.

CIOL:   If any direct benefits to your bottom line with this kind of strategy.

DF: Yes, we can talk about different examples; I talked about the front page a little bit where in the past if you want to be on the front page you would just click on a yahoo news story, course forth story or finance but it was all within yahoo umbrella.  Today with our open strategy anyone can become the front page and click on all link that takes you to the story or features.  Hence, in some ways I would see that’s helping the Wall Street Journals, they are getting more users to read their story ultimately driving more revenue to their site and people might ask how does yahoo benefit from that the answer is that having that story on that page is what the users want. It’s the content that people have told us, is interesting to them. We have done it through this thing called Buzz.  And people are as they are going through the Internet they are building on stories and say this is what interests me and when enough people load on that and buzz its high enough, then that is something that will bring up and say ok, this is what users want, they are interested in this, lets put it on the front page so that more people can see it.  And sure enough people are seeing it, they are clicking on it, they are becoming more engaged; they are more likely to come back because the content they want they want is showing up.  They are more likely to tell friends about it.  So the benefits to us are more users coming out to the network those users seems more engaged and that’s ultimately driving more revenue to yahoo and to the partners. So I think its really beneficial for both. That’s one example and I think we are talking about search as another example that has a different set of benefits for the company. 

CIOL:  What about the Google deal, is it the same kind of benefit for Yahoo?

DF: The Google deal is in some ways similar as I have said before advertising systems used to be very closed. So ten years ago if you wanted Yahoo inventory, you had to come to Yahoo, if you wanted to buy something on Ebay, you had to call up Ebay and talk to them.   Every site that you have advertised on, you had to go to and have relationships with. Today is much different, there are many open ad networks, Yahoo has some of them as well.  We have right media for open exchange where publishers can take their inventory, put it up for sale. advertisers can come in and buy across many different publishers, so there is a very open set of networks, exchanges etc. that have formed. Hence, it helps the publishers because they get access to more advertisers, its good for advertisers to big access to more sites.  It can be yahoo today more selling, ebay and other sites.

CIOL: Don’t you think it will dilute the market, somehow?

DF: I just think that like markets in genera, the more open and the more transparent they are, the more efficient they are, the more it encourages people to buy and sell and trade and we think we are reducing friction ultimately, its good for again all participants.  And I think we have seen it in many different ways in other parts whether its stock exchanges or just other open markets and economies as they opened up. There is some risk there but the benefits, where you are allowed to reach the rest of the world to tap markets that you could not tap before, those benefits and the risks, I think that’s very similar here. By opening up these market places,  we are opening ourselves to many more advertisers.  And we are entering a system which is much more efficient, the pricing is more efficient, its more transparent. And on the search side since you mentioned Google, that deal is really helping us get to a similar space with search.  Search today is not as open But we want similar concepts of open market places to exist on the search side as well.  And so part of that is, if as an advertiser if you want to buy inventory on Yahoo search, should we force you to come in through Yahoo or should we be open to other market places.  And in particular should we be open to the Google market place and that’s what we are talking about. Ultimately, we would like to be open to other market places as well, so that if as an advertiser, you want to buy Yahoo search inventory, you should able to do it through Yahoo, you should be able to do it through Google, and you should be able to do it through Microsoft or who ever. And over time we hope these will become much more open market places and we think this is the first step towards a more open marketplace which encourages competition and we think its good for industry and ultimately is good for us.