Home Biggest Web Tech Flubs of 2007

Biggest Web Tech Flubs of 2007

We’ve already revealed our picks for the “Best Web BigCo” and “Best Web LittleCo” of the past 12 months. But not everything was so rosy for some companies on the web this year. Below we’ve gathered our list of the top flubs in the web technology sector in 2007. In fact, one of the companies we named as our year’s best is on the list. Feel free to add your picks in the comments.

The Facebook Beacon Privacy Debacle

Even though Facebook was our BigCo of the year, not everything worked as planned for the company. Their biggest and most public screw up was the roll out of their new ad system, Beacon. We started getting wind of Beacon in early November when leaked screenshots showed how Beacon would work by sending activity information from third-party sites to the Facebook newsfeed.

Facebook launched their new ad platform a few days after the screenshots hit the web with CEO Mark Zuckerberg calling it a “completely new way of advertising online.” To their likely chagrin, Facebook faced a major backlash from the press, bloggers, and privacy rights advocates over Beacon. While we questioned how much users actually cared about Beacon, consumer advocacy group MoveOn.org made sure it was a big issue in the press. Eventually, Facebook issued a mea culpa and made the program completely opt-in, putting the dark saga behind them (we think) .

Yahoo!’s 100 Days of Futility

Okay, that headline may be bit a harsh, and things might indeed be looking up in Sunnyvale following a strong Q3 earnings report in October, but 2007 was definitely not Yahoo!’s year.

In June, Valleywag noticed just how many members of Yahoo!’s management team had left the company — a trend that would continue all year. Indeed, a couple of weeks after the Valleywag post, Yahoo! announced that CEO Terry Semel was out and co-founder Jerry Yang would replace him. In his introduction as CEO, Yang laid out his infamous 100 days strategy:

“Looking ahead, we want to dramatically improve our performance and capture the major growth opportunities we see ahead for the Internet. I intend to spend the next 100 days or so focused on mapping out a strategic plan for the long-term success, working with our teams to put the right organization and the right people in place, and making any necessary changes.

We are well on our way with a top to bottom review of our business in order to effectively address the company’s challenges and capitalize on our many great opportunities.”

But with the 100 days now long gone (the last day was a couple of months ago), not too much has changed at Yahoo! They trimmed a little fat and their earnings looked a little brighter for the quarter (though it seems unlikely that the CEO switch had much to do with that), but there were no major reorganizations or strategy changes. As Kara Swisher snarkily wrote on Day 99, “But no massive cuts, no major management upheavals, no drastic shift in business, no game-changing purchases and no being acquired either. Then again, there’s still one more day to go!

Yahoo! did make a couple of major acquisitions during Yang’s review time, dropping $350 million to acquire Zimbra, an open source web office company, and also buying BlueLithium, an ad network, for $300 million. But will those acquisitions be what Yahoo! needs to take on Google and Microsoft in web advertising? Is that even what they want to, or should do?

When we asked you in August “Will Jerry Yang turn around Yahoo’s fortunes in 100 days?” a plurality of you (46%) responded, “Yes, Yang will sort Yahoo out and have them challenging Google and MS again.” It would be interesting to hear what you think now that the 100 days is over (use the comments). For their part, Yahoo! is betting that their future (and ours) lies in social networking. Too bad they never could close that Facebook deal…

eBay Writes Down Skype Purchase

Analysts were initially mixed on eBay’s 2005 $2.6 billion purchase of Skype. “I think there were much closer synergies between eBay and PayPal than Skype and eBay,” said David Edwards of American Technology Research at the time. “This is definitely a significant risk and a longer-term play.”

Turns out, he was right. In October, eBay announced that it was writing down $1.4 billion of its Skype purchase, which means that it was adjusting the book value of Skype because it was now seen as overvalued (i.e., they paid way too much). The writedown led to a dismal third quarter for the company which posted a $935 million loss. According to Techdirt, writing down the Skype purchase indicated that “that Skype’s growth has been a lot weaker than the company had hoped.” Oops.

edgeio Folds

edgeio was a “edge-feeder” that aggregated classifieds from all over the web into a single place using RSS feeds. The company raised $1.5 million in angel money and then in October 2006 closed a $5 million series A funding round from Intel Capital and Transcosmos Investments. By December of this year, the company was dead, having run out of money. The company’s assets were sold earlier this month to LookSmart for $280,000.

In and of itself, this isn’t a huge story. Startups fail all the time, and edgeio just burned through $5 million, not $360 million like Amp’d Mobile. The only reason edgeio makes our list is because of who was behind it. Many startups came and went this year, but not a lot that were co-founded by the man who the San Francisco Chronicle calls “‘Mr. Web 2.0, a kingmaker among Silicon Valley entrepreneurs.” That man is Mike Arrington, who runs the wildly popular TechCrunch blog.

Though Arrington says his involvement with the company has mostly been as a board member, it is hard not to notice when a company co-founded by one of the most influential men in Silicon Valley fails.

AOL Buries Their Digg Competitor

In June 2006, with Jason Calacanis at the helm, AOL relaunched Netscape.com as a competitor to social news site Digg. The site never really caught on, but as TechCrunch notes, the rebranding to Propeller was even worse.

From it’s peak of 305 million page views per month in November 2006, Netscape saw a drop in traffic of 55.1% over the next 9 months to 137 million page views in August 2007. But when AOL decided to move Netscape to Propeller, the site only managed to capture just under 10% of their August Netscape audience (Propeller had 13 million page views in November of this year, according to comScore).

In that same period, Digg’s traffic has increased 318% and Reddit has also seen growth.

Windows Live Branding Mess

Seriously… what? One only has to look at “The List” from the LiveSide blog (which displays all of the Windows Live products) to understand just how impossible to understand Microsoft’s branding strategy is. Often times it seems like Microsoft just slapped the “Live” name on all of their new web services (and some offline ones) without any thought as to how they might fit together.

In February we wrote about how confusing Windows Live as a branding strategy was. At the time Richard MacManus wrote that “Windows Live is a good enough brand, signifying Microsoft’s set of Internet-connected software and services. But right now the name is being applied inconsistently and is also leading to unwieldy brand names (Windows Live for Windows Mobile being the latest example).”

Things are not any more clear at year’s end. Let’s hope 2008 brings a more easily traversed Microsoft product line. But really, don’t hold your breath.

Near Miss: Twitter Down for Nearly 6 Days in 2007

According to Royal Pingdom, Twitter was down for almost 6 days (5 days and 23 hours to be exact) in 2007. For any other company, this might spell doom, but not our LittleCo of the year! If anything, the service has gotten more popular in spite of the frequent down time. Those with “Twitterdiction” may have suffered through some nasty withdrawal when Twitter went offline for extended periods of time, but abandon the service they did not.

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