Displacement Hypothesis
Have you ever pondered on what happens to the things we used to do when we have new things to do? Whatever happened to Yahoo or AskJeeves? Displacement hypothesis can explain some of this. The framework of the hypothesis basically states that the use of new innovations cancelling out the use of other less performing or older innovations, known as a zero-sum relationship. This pattern can be seen throughout history, in fact in the past century when televisions began to explode a clear indication of people began to read less as they watched more TV. New technology leads to more choices which leads to the unfortunate decline and eventually nonexistence for some. In today’s age with how much the internet has changed how we live and connect with others there is a high competition and a pace that must be kept up with in the digital world or else you will be left behind and forgotten. It can be quite shocking how fast technology and innovations can evolve in the matter of years and now we have seen in the past decade that if you cannot fulfill the needs of an active audience online they will leave. If we look back at the history of search engines and social media it can be quite interesting to see who were the top companies back then and now 10–15 years most of them are unheard of now. In the early 2000’s, around 2001 and 2002, the search engine wars began to jump to the top and grab the most market share.
Yahoo and AskJeeves were known to be among the top search engine providers. By 2005 Yahoo spent upwards of 2 billion dollars purchasing other companies that they felt could help their business or felt threatened by. In the same year IAC (owner of ticketmaster.com and match.com) buys Ask Jeeves for $1.85 billion, changes name to Ask.com. Now ask yourself how long do you think it will take or if it will happen ever for Google to phased out? It seems like it has been here to stay and continuously growing each year into one of the biggest tech giants in the world. If we look back at some of the mistakes Yahoo made over the years is can be quite apparent to why they are no where near the level of Google or other tech giants. In 1998 Yahoo had the chance to buy Google outright for 1 million, which to Yahoo obviously seemed too expensive at the time for a start-up company. By 2002 Yahoo realizes their mistake and offers 3 billion to buy out Google. Google counters their offer and asks for 5 billion. Which seemed to expensive for the company that only had a smaller of of the market share than them. Today Google has a value of over 500 billion and stands alone at the top for search engines. What also adds to the pain of Yahoo is they rejected an offer from Microsoft to be bought out for 40 billion in 2008 and ended up selling out to Verizon in 2016 for little over 4 billion. It seems to be Yahoo was poorly managed, had a bad business model and for that was eventually passed up in their industry. If I had to guess Yahoo never searched what the displacement hypothesis was or else they could have seen this coming before it was too late. We can learn a lot from looking at the past to help us prepare fro the future and make sure these things do not happen again and Google has done an excellent job of keeping up with technology and innovation over the years. As well as satisfying the needs and wants of their consumers by continuously updating their platform to fit the needs and wants.
