Yahoo bets on AI tool Scout to revive search ambitions

Yahoo is turning to artificial intelligence with its new answer engine, Scout, in a fresh attempt to regain its position in online search.

The AI-powered tool provides direct answers along with links to supporting sources. In a response to an AP query, Scout said Yahoo's decline showed how early success can fade without constant innovation.

Yahoo CEO Jim Lanzone hopes to use AI to tap into the company's global base of about 700 million users who still rely on its finance, sports, news and email services despite years of setbacks.

Lanzone took charge after Apollo Global Management acquired Yahoo for $5 billion in 2021, far below its peak value of $125 billion during the early 2000s dot-com boom. Before that, Verizon had bought Yahoo's core business in 2017 but failed to integrate it successfully with AOL.

Years of missteps under multiple leaders weakened Yahoo's standing, though it managed to survive, unlike some former tech giants, analysts say.

Since taking over, Lanzone has focused on cutting underperforming units, selling assets like TechCrunch and shutting down AOL's dial-up service. He says Yahoo is now profitable and generating billions in revenue.

The company has also upgraded key products, including its fantasy sports platform and email service, which remains the second largest after Gmail.

With Scout now rolled out to 250 million users in the US, Yahoo aims to offer simpler and more personalised search results. However, it faces tough competition from Google and AI platforms like ChatGPT, Claude and Perplexity.

Yahoo is currently using AI technology licensed from Anthropic to run Scout. Lanzone said the tool is designed to deliver answers without mimicking human conversation.

Founded in the 1990s as a web directory, Yahoo lost its edge after shifting focus away from search, allowing Google to dominate the space.