Yahoo's co-founder Jerry Yang has announced he is stepping down as the head of the struggling internet giant. Yahoo started way back in the beginning of the internet and was nothing more than a directory. While yahoo has grown to be the largest directory on the net why are they having so many problems?

Two syllables really, Google and these guys have been a thorn for many great businesses on the net over the last 5 years. AOL was once a powerhouse in search and as a home directory for millions and their business has dried up significantly. In fact today AOL uses Google as their search engine brains, Google has become so dominant in internet search that no one today is able to compete.

Statistically Google has over 70% of the search traffic, Yahoo is in second with about 13%, Microsoft/MSN has roughly 8% and the rest is split over hundreds maybe even thousands of search engines.

Given how large Yahoo's business has grown in terms of services it's difficult to say where they went wrong. Most of the money that Yahoo makes is through advertising and again in this department Google has all but annihilated the competition. Yahoo decided to focus on hiring people to build the business rather than focus on what they do best which was build systems to manage data. If you could point out one major area I think this might be it.

Google Adwords and Adsense for those that don't know basically are the reason the internet is full of ads. While there are thousands of imitators Google has a massive business here. There are expected to make 15 Billion dollars this year from the Adwords business, yes that was with a B.

To give you another idea of how big this business is, Adsense is how web site owners make money from the ads. Google pays a portion of their revenue to the owner of the web site on a per click basis, Google then will send a check or transfer funds once the account has reached $100 dollars US. Google has so many Adsense subscribers that haven't reached the $100 minimum that they have 350 million dollars sitting in a bank account full of funds they have been paid for. Because of the $100 minimum they don't legally have to pay the advertiser that gave them the business. Yes it's that big.

Yahoo had every opportunity, the size and power that they could have been the ones making this money. Hind sight is always 20/20, when it comes to the internet in many cases the computers can run the business you just need to find the best minds in the business to put it together and that is what Google has done an amazing job of.

Should Yahoo have sold to Microsoft for 47 Billion dollars which is over 3 times the current value of the share price? Probably, the next question is who is going to replace Jerry Yang as the Chief and will he make better decisions for Yahoo's future. They still are one of the best web portals on the net and do have a lot to offer, they just need to make more money!