In response to Mexico’s $2.7 billion US dollars judgement, Yahoo states they “will vigorously pursue all appeals.” The non-final judgement made by a Mexico City court ruling is for a breach of contract with a former partner – Ideas Interactivas and a company Worldwide Directories. Josh Constine explains the intent of the book-form directory:
The idea was to augment its online local business search with printed book. Yahoo hoped that the two-pronged strategy would let it compete with Google. The books would include maps, business and landmark listings, and a catalogue of offers and discounts. There would be flexible, low-cost advertising options in Yahoo! Páginas Útiles, which was slated for an initial circulation of 800,000 free copies followed by a second print run of 1.7 million units according to a April 2003 article from Mexican website Noticias Dot.com.
Yahoo says the case is “without merit.”
The ruling comes at a time when Yahoo! and its owners are looking to find a new direction for their business and its focus. Just another obstacle for CEO Marissa Mayer who just recently shut down services in Korea. The company has not been generating much traffic through Korean browsers as many users have turned to Google Inc.’s search engine and leading social media service providers such as Facebook Inc. and Twitter Inc.
You can read more on the details of the agreement announced in 2003 here.
The $2.7 billion ruling against Yahoo is pretty troubling considering Yahoo’s total revenue for last quarter was just $1.2 billion, and only $226 million the quarter prior. If Marissa Mayer’s appeals are unsuccessful this could prove to be a serious disaster for the CEO’s new direction. The case could take months or even years to be settled and the penalty their facing doesn’t hang well on the wall until then. As these charges will surely hurt their reputation, the intent of the former partners’ actions seems far more painful.
Josh’s article also explains the absurdity of the judgement in a relative matter:
The scope of the contracts between the companies are not yet clear. If the deals were for Mexico alone the penalty would amount to $30 per resident. A 2005 study said there were 4.29 million businesses in Mexico, which would mean Yahoo would pay $630 each. That seems somewhat absurd, so the total Yahoo has to pay could definitely get reduced if it doesn’t beat the charges all together during appeals.
Word from Yahoo on the details of the courts initial ruling and the agreement made with Worldwide Directories and Ideas Interactivas is still being anticipated.