Even before the news was confirmed on Monday, critics with long memories were reminding anyone who would listen about Yahoo’s track record with acquisitions, which has some rather notorious bumps in it, including two major ones known as GeoCities and Flickr. Those two deals alone have made many question whether Yahoo will be able to do the right thing with Tumblr — and while it may be unfair to lay the blame for these at Marissa Mayer’s feet, there are plenty of reasons to be skeptical about the future of this latest acquisition.

How long will it take yahoo to ruin tumblr?—
Blake Hounshell (@blakehounshell) May 19, 2013

GeoCities + Flickr: billions in missed opportunities

In 1999, Yahoo bought GeoCities for about $3.5 billion, which even at the time was an eye-popping amount. Although it was over a decade ago, which is eons in internet time, there are some broad similarities between what GeoCities was then and what Tumblr is now: both were distinctive and somewhat chaotic communities, focused on allowing individuals to create their own space. Yahoo did a number of things that arguably accelerated the demise of its high-priced acquisition, including trying to monetize it through hosting fees and cheesy banner ads.

The other stick that many anti-Yahoo types use when they want to beat the company up about its acquisition strategy is Flickr, the pioneering photo community that languished under Yahoo’s ownership until relatively recently. As many of its hard-core fans (including me) have argued in the past, Flickr was — or at least could have been — Instagram before Instagram.

There have been a number of post-mortems on what happened with Flickr, but in a nutshell Yahoo did almost everything wrong: the larger company took away or smothered much of the photo-sharing community’s most important features, prevented its employees from innovating or growing, and forced all kinds of integration between the two platforms that did nothing to benefit users — in fact, precisely the opposite. It was like the trifecta of failure, and a perfect example of why most large-scale acquisitions don’t work.

“All Yahoo cared about was the database its users had built and tagged. It didn’t care about the community that had created it or (more importantly) continuing to grow that community by introducing new features.”

Successful mergers are exceedingly rare

It’s certainly reasonable to argue — as many of her fans in Silicon Valley have since the Tumblr deal was announced — that Marissa Mayer shouldn’t be held to account for these lapses, since she had nothing to do with them and the internet has changed a lot since then. Yahoo is also substantially more desperate than it used to be (if that’s possible), and that has arguably made Mayer more cautious about potential screw-ups.

But the bottom line is that just because Mayer is a new CEO doesn’t mean she or the company won’t screw Tumblr up somehow anyway — either deliberately or by accident. That’s because large companies like Yahoo have a way of destroying the value of the things they acquire even if they don’t mean to do so, especially when the thing they have acquired is a somewhat unique community with special characteristics, which Tumblr arguably is.

This is why successful large acquisitions of web communities or services are so rare — rare enough that almost everyone can only point to a single example: namely, Google buying YouTube (although Facebook’s acquisition of Instagram is looking like it may be another one). The question for Yahoo and Mayer is whether Tumblr can be kept as a distinct entity and yet still monetized, as YouTube has been, or whether the process of monetization will inevitably turn Tumblr into the latest example of a MySpace-style failure.

Can Yahoo do what Google did with YouTube?

Former YouTube exec Hunter Walk took a look at what Google did right in the case of YouTube, and boiled it down to five factors, including keeping the product from getting too intertwined with the parent company and maintaining a separate physical identity. But to me the most important ones were:

Protect Tumblr from “helpful” Yahoos: This is where the accidental destruction of acquisitions often comes from — people who just want to help, but whose requests for features and other attempts at integration wound up almost “hugging us to death,” as Walk puts it. There is a powerful desire to get efficiencies out of acquisitions, but many of those attempts fail badly and ruin the thing they were trying to monetize or grow in the first place.

Stop short-term monetization that won’t scale: Walk talks about how YouTube managed to avoid the natural desire to build all sorts of easy-win monetization methods into the platform, and focused instead on longer-term approaches that were harder to sell in the early going but built more value. If Yahoo sees Tumblr as a way to bulk up its banner ad or other programs, it could wind up making the exact same mistake that YouTube was able to avoid.

In the end, much of the answer to the question about Yahoo screwing up Tumblr rests on Marissa Mayer, and her ability to stave off the desires of both the board of directors and the other senior managers who see Tumblr as either a distraction or a digital cow to be milked and then sent to the abattoir.

Post and thumbnail photos courtesy of Flickr / Stephen Brace and Getty Images / Chris Jackson and Pamuk Sekerli Tardis

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• The state of cross-platform media measurement
• The evolution of consumer-media cloud storage
• Social media in Q1: commerce and discovery dominated

(Update: Clearwire has rescheduled the meeting again, this time for Friday, May 31.)

Ever since Sprint made its $2.1 billion buyout offer in December, Clearwire shareholders have been expressing increasing dissatisfaction with the terms of the deal, especially after Dish Network swooped in with a counter offer. Sprint’s new bid is 19 percent higher than its old one and beats out Dish’s $3.30-a-share proposal.

Even if Clearwire shareholders accept Sprint’s new terms, Dish isn’t going away. The company is playing multiple hands, offering to buyout Sprint itself, despite the buyout deal it struck with Softbank. Sprint has kept Dish at arm’s length throughout the negotiations, but on Monday Softbank agreed to let Sprint start working directly with Dish, releasing internal documents necessary for any merger negotiation.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• The future of mobile: a segment analysis by GigaOM Pro
• A look back at mobile in the third quarter
• Mobile 2012 and beyond

Of course, as Om and others have already mentioned, there’s no guarantee this deal will actually be consummated: it could fall apart on valuation, as so many deals do — or Facebook could swoop in with a much higher offer and snatch Tumblr out of Yahoo’s clutches, the same way it did when it stole Instagram away from Twitter last year for close to $1 billion.

Update: According to the Wall Street Journal, the Yahoo board of directors has approved a $1.1-billion all-cash bid to acquire Tumblr.

It makes Yahoo look desperate — because it is

Even if the deal does get done, one of the risks for Mayer and Yahoo is that the company could look desperate by paying more than $1 billion for a site that had revenues of less than $15 million last year (although CEO David Karp has said that figure should hit $100 million this year). That’s an almost bubble-like multiple for a company, and there will likely be plenty of criticism from investors who believe that $1 billion could be better spent elsewhere — in other words, on businesses that would make Yahoo a better return.

But the painful fact is that Yahoo doesn’t just look desperate — in many ways it is desperate. Mayer has made some changes since she took over the ailing former web portal, including the acquisition of Summly and a number of other mobile-focused startups and services, but the company still needs to make some aggressive moves if it is going to jump-start any growth at all. And since Yahoo has about $4 billion in cash on hand, it can arguably afford to make a big bet.

Yahoo buying Tumblr makes sense. Tumblr is only big, cool, newish social platform that Yahoo can afford.—
Henry Blodget (@hblodget) May 17, 2013

For Yahoo, the addition of Tumblr would do a number of things: because of the size and profile of the deal, it would make a major statement about Mayer’s intention to do whatever it takes to revitalize the company, and it would also send a signal to Facebook and Google — and even Apple — that Yahoo is a potential force to be reckoned with when it comes to potential acquisitions. Is doing that worth $1 billion? That’s for Yahoo’s investors and board of directors to decide.

Just as important, it would inject some much-needed life and energy into the somewhat stale lineup of content that the company currently relies on, which caters more to the over-50 set than it does to anyone in the much-desired 18 to 25 demographic. More than any other network, Tumblr is the platform of choice for media-obsessed teens and 20-somethings, who spend massive amounts of time sharing photos and videos and animated GIFs on the site — an engine of potential value that Yahoo desperately needs.

Tumblr gets a massive exit

This doesn’t come without its own risks, of course: As a number of observers have noted, Tumblr’s content contains a large quantity of not only mature or arguably offensive content but outright pornography, which many argue is the source of its massive traffic numbers. How Yahoo (or Facebook for that matter) would deal with this kind of content remains to be seen.

3 q's for Yahoo: 1) Can you convert Tumblr users to Yahoo products? 2) Can you monetize Tumblr PVs? 3) What to do w/ all that Tumblr porn?—
Mark Zohar (@markzohar) May 18, 2013

For Tumblr, meanwhile, being acquired would solve a number of problems — the main one being that the company has gone well beyond the “we’re a startup so we don’t really have to make money” stage, and is facing increasing pressure from the investors who have given CEO David Karp more than $125 million in venture financing, an investment that values the company at about $800 million. Accepting a giant check from Yahoo would take care of that problem in one fell swoop, especially if it was all in cash.

With a major company like Yahoo as a partner, Tumblr could connect its massive audience of users to the firehose of ads and other monetization methods the giant web portal has, and potentially generate much more revenue than it could have by itself. The only lingering question at that point is whether Tumblr fans decide that Yahoo is poisoning the well of social content and community on the site, and decide to flee for greener pastures. In other words, does Yahoo make Tumblr into YouTube — a successful standalone network that can grow and prosper on its own — or does it become MySpace?

The only scenario where a Yahoo-Tumblr combo works is if Yahoo keeps Tumblr separate in the same way Google managed YouTube.—
Mark Birch (@marksbirch) May 18, 2013

Post and thumbnail photos courtesy of Shutterstock / ollyy and Albert Chau

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Flash analysis: future opportunities for Pinterest
• The state of cross-platform media measurement
• Readers weigh in: future prospects for Twitter

For those who may not have used it, Waze — which won our Launchpad event at Mobilize in 2009 — provides real-time information about everything from road closures and accidents to traffic backups and police speed-traps. The information is superimposed on a scrollable map, and there are also a number of social features built in, which allow users to see and share information, including messages, with other drivers. Waze even provides gas-price data.

Facebook wants to acquire mobile users

If Facebook does acquire Waze for $1 billion, as reported by Israeli media outlets like Calcalist and Ynet, it would be one of the biggest acquisitions the social network has ever made, rivalling the purchase of mobile photo-sharing service Instagram (which signed a deal for $1 billion but actually wound up being acquired for $750 million due to a drop in Facebook’s share price). And the rationale for the deal would be much the same as it was for Instagram — namely, acquiring and holding onto mobile users.

As my colleague Erica Ogg explained when the Apple rumors were floated earlier this year, Apple would also make a good fit for Waze, in part because the company’s mapping app is seen by many as an also-ran to Google’s more feature-rich service — which is why there was such an outcry last year when Apple suddenly cut off Google and switched iOS users to its own maps.

But while Apple would be a good fit, and Facebook has its own reasons for wanting a service like Waze, I think Google would be the real loser if it went to either of these companies, for the simple reason that Google Maps is a big part of the company’s mobile appeal — at least for me, and I would suspect for many others. My reliance on Google Maps was one of the reasons why Apple’s move irritated me and helped push me towards the Android platform, and Waze is good enough that it could help either Apple or Facebook leap-frog Google.

Google has the most to lose

I’ll admit that I was somewhat skeptical about the value of Waze until I tried using it on a long drive from Florida to Toronto earlier this year. I had looked at the service a few times, but it didn’t have a lot of data or users in Canada (it now has about 45 million users worldwide) and I didn’t see the appeal of the social elements. But when I started using it during this long drive, its utility quickly became obvious — and I stopped using Google Maps altogether.

I’m not yet sold on the ability to connect with other users through the app (unless they are friends already, which would make sense if you were on a trip together), but being able to see at a glance where there is a traffic jam — and even what speed people are going who are stuck in it — and where there’s a speed trap or a police car on the roadside was hugely useful. The gas price data also came in handy more than once.

Google Maps also has traffic data, and it is also based on real-time information, which comes from other users of the service who have their GPS location turned on. It is pretty accurate — but I don’t find it nearly as useful as Waze. I didn’t think enough people would take the time to enter information about things like traffic or speed traps into Waze to make it useful, but I was wrong. And Google doesn’t seem to have any plans to try and duplicate that, since it is more focused on automating that whole process, in typical Google fashion.

There’s no sign that Google has shown an interest in acquiring Waze, but I think the company would be stupid not to at least consider trumping Facebook’s offer. It could wind up losing its way, and a bunch of mobile users to boot.

Post and thumbnail photos courtesy of Flickr user Dunechaser and Waze

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• The fourth quarter of 2012 in mobile
• Analyzing the wearable computing market
• Hyperlocal: opportunities for publishers and developers

One of the most prominent, Microsoft researcher danah boyd (who spells her name without capital letters), said on Twitter that the takeover was “sad,” and that she doesn’t believe Mendeley can help Elsevier repair the reputation it has developed for being against open access to research — a reputation that is based on the publisher’s support of the failed anti-piracy legislation SOPA, among other things.

Another prominent critic of the acquisition is David Weinberger, a senior researcher at Harvard’s Berkman Center for Internet and Society and a co-director of the university’s Library Innovation Lab, which played a role in designing the new Digital Public Library of America project. Despite the assurances of executives at Mendeley that it would remain open — including its access API — Weinberger expressed scepticism that the company would be able to resist Elsevier’s attempts to make it more closed (he expanded on this on his blog).

Some of those who responded to the news of the acquisition seemed to see Mendeley’s acceptance of the takeover as a breach of faith, since the company had been such a vocal supporter of the open-access movement — a movement that many saw as directly opposed to the interests of companies like Elsevier. At least one observer compared it to “Haliburton buying Greenpeace,” and others made comparisons to the Empire in the Star Wars movie universe, or the Borg from Star Trek — both evil forces who eventually absorb or destroy the heroes of the story.

Mendeley’s director of academic outreach, William Gunn, responded to many of the critical comments about the acquisition, and said that the company plans to remain as open as possible following the deal:

Elsevier has been the target of a sustained attack from open-access advocates who organized a boycott of the company’s journals, galvanized by Fields Medal-winning mathematician Tim Gowers — arguing that its publications are too expensive and keep valuable research locked up in a virtual cartel. One commenter on a news story about the Mendeley acquisition said: “They spent their whole life as a company arguing they were the next big thing in open publishing only to sell out,” while a commenter on a thread at Hacker News about the deal said:

“Mendeley should be ashamed, and you personally should be ashamed for perpetuating this nonsense. Within a year your company will be effectively dismantled and anyone left over who actually cares about open access can start over from scratch. I wish them luck.”

News of the acquisition re-ignited interest in the “mendelete” hashtag on Twitter, which was devoted to criticisms of the deal and the exploration of alternatives such as Zotero. One commenter said: “Was Mendeley more about its values or its services? Some of its biggest supporters have become its shrillest critics #mendelete.” If nothing else, these kinds of responses show just how much work Elsevier has ahead of it when it comes to reassuring academics and others that their commitment to openness is real. As Emily Bell at Columbia University put it:

Disclosure: Reed Elsevier, the parent company of science publisher Elsevier, is an investor in GigaOmniMedia, the company that publishes GigaOM.

Post and thumbnail images courtesy of Shutterstock / Luis Santos

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• The importance of putting the U and I in visualization
• AWS Storage Gateway jolts cloud-storage ecosystem
• 9 Companies that Pushed the Infrastructure Discussion in 2010

The young Brit created Summly to try and help solve the problem of consuming news content on a mobile device (something a number of others are focusing on as well, including San Francisco-based Circa). The app created machine-generated summaries of news articles, and D’Aloisio said in a phone call from London that he wants to see what Yahoo can do by applying the same kind of algorithmic approach to some of the company’s other news and entertainment content:

“It’s going to be a really fun journey. To see where we can take our technology with Yahoo’s focus on mobile under Marissa Mayer will be really exciting… there is so much opportunity to take these daily habits like weather, news, stocks and sports and use technologies like Summly to really turn them into an A-star experience. And I want to be there for as long as I feel is necessary to get Summly and Yahoo really doing well with mobile.”

Yahoo has a chance, D’Aloisio says

Although Yahoo has been criticized by many (including us) for being too large and slow to adapt to the new age of digital content, D’Aloisio said that he is excited about joining the company, and thinks that Yahoo under Marissa Mayer has a chance to be great again:

“Definitely with the approach they are taking at the moment — they’re moving at light speed, and it’s really exciting to be joining the company at this stage, because there’s so much opportunity in the next 12 to 24 months to take technologies like Summly and the other assets they have, like the newsroom and all of this content, and take it to the larger mainstream.”

The Summly founder said that while many see Yahoo as an also-ran, he thinks the company still has a chance to take advantage of the millions of users it has:

“Yahoo to me, as the founder of a company, is one of the biggest opportunities you could have — it’s one of those classic internet companies… the fact is that they have massive leverage in the industry, they have hundreds of millions of people coming to their content every month, and it’s really exciting to be building for that scale. That’s the exciting thing — it’s the scale that Yahoo brings, and that user base, that I really want to build products for.”

A “surreal journey” at times

D’Aloisio also admitted that he was surprised at how something that began as a hobby has turned out, and how much he has accomplished at such a young age:

“It’s a surreal journey. I guess I always saw this as a hobby — it’s just a passion of mine. And the fact that it’s [resulted in] an acquisition is something I never expected… and it wouldn’t have been possible without Horizon Ventures and Li Ka-shing, who took a gamble on me as a teenager. I really owe it to them and to everyone who has been by my side supporting me.”

The young entrepreneur said he has had a number of learning experiences along the way — including one described in a Gizmodo post from 2011 entitled “How I Made a 15-Year-Old App Developer Cry” — but added that it has been “a really incredible journey,” and he is looking forward to the next chapter with Marissa Mayer and Yahoo. One thing is for sure: If everyone at the company was as eager as D’Aloisio seems to be, the company would have no reason to fear the future.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• NewNet Winners and Losers of 2009
• Facebook’s IPO filing: ideas and implications
• Connected world: the consumer technology revolution

In February, Oracle announced it would buy VoIP signaling vendor Acme Packet for $1.7 billion. The terms of the Tekelec deal weren’t disclosed. Once it closes on both investments, Oracle is set to become a signaling powerhouse.

Tekelec specializes in the signaling protocols and load balancing technologies that prevent mobile networks from getting overloaded. For instance, the outages Verizon experienced on its LTE network in late 2011 were partially attributable to signaling overload. Meanwhile, Acme Packet makes session border controllers (SBCs), which manages VoIP and multimedia control traffic that pass between carrier and enterprise networks.

Oracle, however, will get more out of Tekelec than just signaling expertise. Tekelec is also a big player in the traffic-shaping world. Mobile operators use its policy servers to prioritize bits from certain type of applications – and certain subscribers’ – over others. The result is a bunch of things most of you don’t often find pleasant, such as throttling back your data speeds when you exceed your monthly cap or detecting when you use your phone as a mobile hotspot and charging you extra for it.

But eventually those same policy management features will be used for a much broader range of features and tailored data plans. Jasper Wireless is using Tekelec traffic shaping technology to make data flow more smoothly in the internet of things, for example. And operators are weighing new types of tiered data plans that allow customers to customize their network connections based on the types of apps they use.

“Oracle has in the past partnered to provide these capabilities, but by bringing them in-house it will have more opportunity to shape the roadmap and combine the capabilities in a more tightly-coupled solution,” Ovum Principal Analyst Dana Cooperson said in a research note. “Expect Oracle’s telecom-focused competitors (Alcatel-Lucent, Huawei, Ericsson, etc.) and it’s IT-focused competitors (HP, SAP, SAS Institute) to do more strategic soul-searching and, as their financial situation allows, to pursue acquisitions of their own.”

Many of them already have. Cisco Systems bought policy management firm BroadHop in December, while Citrix System acquired ByteMobile.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• New solutions for the evolving mobile network
• Research In Motion: future scenarios for its fate
• Mobile 2012 and beyond

In a statement, Comcast CEO Brian Roberts said that the decision was driven by “our sense of optimism for the future prospects of NBCUniversal and our desire to capture future value that we hope to create for our shareholders.” Roberts also said that he believes Comcast is in a “strong and unique position” to build value in the combined company.

The Comcast deal will not have to be approved by federal regulators, who fined the cable company $800,000 last year for failing to meet some of the conditions it placed on the original purchase. Comcast said it expects the deal to close by the end of March.

As part of the acquisition, NBCUniversal will also buy the buildings that it uses at 30 Rockefeller Plaza in New York and CNBC’s headquarters in New Jersey for about $1.4 billion. According to the New York Times, a “clash of cultures” was partly responsible for speeding up Comcast’s decision to buy the remaining part of the company.

Comcast also announced its fourth-quarter financial results ahead of schedule, and said its earnings climbed by 19 percent from the same period a year ago, while revenue rose by 6 percent to $16 billion and operating income grew 13 percent to $3 billion. The company said it will increase its dividend by 20 percent and will repurchase $2 billion worth of stock this year.

This story was corrected Tuesday evening to clarify that the deal is not subject to federal approval, as originally stated.

Image courtesy of Shutterstock / Cedric Weber

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Who and what to watch in the new era of the living room
• Connected Consumer 2011: What Not to Expect
• Why Apple Could Be a Loser In The Comcast-NBC Deal

When Sprint made its bid in December to buy up the remaining shares of Clearwire it didn’t already own, it also agreed to extend $800 million in financing to the hobbled WiMAX carrier. Clearwire could have started withdrawing those funds in January. But when Dish submitted its counterbid it clearly stated that if Clearwire took that money from Sprint, the satellite TV provider would take its offer and skedaddle.

Clearwire didn’t dip into the Sprint financing in January while it was reviewing Dish’s offer. On Friday, Clearwire revealed it wouldn’t tap those funds in February either, which would keep Dish at the table and allow it to continue negotiating. The filing also reveals that since 2010 Clearwire has held negotiations with at least nine other entities over possible spectrum sales, strategic partnerships or outright acquisitions.

Though Clearwire hasn’t eliminated Dish from consideration, Sprint said the recommendation in the proxy statement was a clear vindication of Sprint and the substance of its offer. From Sprint’s statement:

“We continue to believe that the DISH proposal is illusory and conditioned on many things, including the receipt of governance rights, a spectrum sale and a commercial agreement which are not actionable under our merger agreement and other agreements between Clearwire and Sprint. We are pleased the Clearwire Board continues to recommend approval of our transaction and look forward to closing our merger and delivering even greater wireless service to the American consumer.”

Photo courtesy of Shutterstock user Gary Paul Lewis

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• 12 tech leaders’ resolutions for 2012
• Mobile 2012 and beyond
• CES 2012: a recap and analysis

Here are some of the facts I found notable from the report, complete with accompanying charts from CB Insights:

• Of the companies that were acquired, 76 percent had not raised any investment and instead obtained funds through other avenues:

• Facebook and Google made the most acquisitions last year, doing 12 acquisitions each, with Facebook making acquisitions primarily for talent:

• Out of all the companies acquired, just eight were acquired for more than $1 billion. Those eight companies amount to less than 3 percent of all acquisitions in 2012. 80 percent of companies were acquired for less than $200 million, and more than 50 percent were acquired for less than $50 million:

• Not surprisingly, California saw the most acquisitions, although every state except South Dakota saw at least one:

• And for everyone betting on New York City over San Francisco for the best place to launch your startup, take note: New York saw the highest percentage of acquisitions of internet companies:

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• 12 tech leaders’ resolutions for 2012
• Social 2013: The enterprise strikes back
• Flash analysis: future opportunities for Pinterest