Yahoo turns to AI-powered answer engine Scout to lead it back to its
roots in online search
[March 28, 2026] By
MICHAEL LIEDTKE
SAN FRANCISCO (AP) — Internet trailblazer Yahoo is exploring
technology's next frontier with Scout, an answer engine powered by
artificial intelligence. Scout seems insightful, based on its response
to a question posed by The Associated Press about why one of Silicon
Valley's brightest stars faded away a decade ago.
“Yahoo’s journey illustrates how a company with an early advantage can
disappear without continuous innovation," Scout explained, while also
providing hyperlinks to other websites supporting its thesis.
Scout may have to come up with a different interpretation if Yahoo CEO
Jim Lanzone can leverage AI to expand upon a worldwide audience of 700
million users who have stuck with the company's finance, sports, news,
fantasy and email services, despite a history of folly that nearly
destroyed a brand once synonymous with the internet.
Yahoo has “always been the white whale of turnarounds for me,' said
Lanzone, who has a track record for salvaging internet wrecks. “I always
thought I could do something with this thing."
Lanzone, 55, finally got his chance after the private equity firm Apollo
Global Management paid $5 billion to take over Yahoo in September 2021 —
a fraction of its peak $125 billion market value reached during the
dot-com boom's giddy days in early 2000. Apollo's acquisition came after
Verizon Communications bought Yahoo's online operations in 2017 and then
bungled an attempt to blend those services into AOL, another internet
pioneer.
Verizon never would have gotten the chance to buy Yahoo's online
operations if not for the company's perpetual blundering under seven
different CEOs in 16 years.
Although Yahoo's checkered past didn't destroy the company, it left a
stigma that makes it unlikely that it will ever come close to what it
once was, said Jeremy Ring, who was among Yahoo's first employees when
he began selling ads for the service from his New York apartment in
1996.
“Even though Yahoo isn't what it once was, it hasn't turned into a
Blockbuster or Radio Shack story either,” said Ring, who delved into the
company’s ups and downs in a 2018 book, “We Were Yahoo!” “What is going
to enable them to compete against all the bigger companies using AI? I
am not convinced all the best engineers in the world are suddenly going
to come work at Yahoo."
Lanzone's renovation efforts initially focused on shedding Yahoo's
dysfunctional parts. The teardown included jettisoning some of Yahoo's
advertising technology, selling publishers such as TechCrunch and Rivals
and closing down AOL's internet dial-up service in a move that cut off
its final 500 users. As it stands now, Yahoo is “very profitable” and
bringing in billions of dollars in revenue, Lanzone said, while
declining to be more specific.
Once he got the cleanup work down, Lanzone began overhauling what
remained — a process that has resulted in an upgrade of Yahoo's popular
fantasy sports division and a major overhaul of its email service that
still ranks as the second largest on the web behind Google's Gmail.
With the recent introduction of Scout to its 250 million users in the
U.S., Yahoo is leaning into the AI movement with the hope that the s
technology will simplify online search and produce more personal results
tailored to each user's interests. Lanzone is also hoping Scout turns
into a flywheel, continually spinning traffic through its other
services.
[to top of second column] |
Yahoo CEO Jim Lanzone poses for a photo on Feb. 24, 2026 in Yahoo’s
San Francisco office. (AP Photo/Michael Liedtke)
 Yahoo will be competing against a
familiar foil in Google, which remains the same formidable force
that spelled the company's demise 20 years ago and has been
progressively layering more AI into its search engine with its
Gemini technology. As if that isn't daunting enough, Yahoo also will
be vying against other popular AI chatbots such as OpenAI's ChatGPT
and Anthropic's Claude in addition to answer engines such as
Perplexity.
In a tacit admission that it's behind the curve, Yahoo is running
Scout on AI technology licensed from Anthropic.
Unlike other AI chatbots and answer engines, Scout doesn't simulate
human conversations so users can “have a fake personal relationship
with it,” Lanzone said. “The product is very unique, even though we
didn’t invent AI in the first place."
Yahoo's pursuit of more online search traffic has been largely an
exercise in futility since the late 1990s, a descent that started
just a few years after Stanford University graduate students Jerry
Yang and David Filo founded the company as the internet's first
comprehensive directory of websites.
But as the internet began to play a bigger role in entertainment and
commerce, Yahoo shifted its focus from sending traffic elsewhere to
building an all-purpose website that people wouldn't want to leave.
That strategic pivot opened the door for two other Stanford
University graduate students, Larry Page and Sergey Brin, to create
a search engine called Google.
After turning down a chance to buy Google for just $1 million in
1998, Yahoo poured even more resources into creating a one-stop
destination while paying so little attention to search that it
turned to another company to provide that technology in 2000. Yahoo
not only hired Google as its search engine but also promoted its
brand on its website. By 2002, Yahoo was offering to buy Google for
$3 billion, but Page and Brin wanted $5 billion. The negotiating
impasse launched Google on a trajectory toward an internet empire
now valued at $3.7 trillion under corporate parent Alphabet Inc.
Yahoo went through a revolving door of seven CEOs, including former
Google executive Marissa Mayer, on a quixotic quest to catch up in
search before finally ending its 21-year existence as a publicly
traded company with its ill-fated sale to Verizon for $4.5 billion.
Along the way, Yahoo rejected a $44.6 billion takeover bid from
Microsoft in 2008 before finally agreeing to license the software
maker's Bing search engine.
If Yahoo's bet on Scout pays off, Lanzone concedes it could lead to
the company returning to the stock market more than 30 years after
completing a 1996 initial public offering that intensified the
dot-com fever gripping investors back then. Lanzone believes another
Yahoo IPO could still get people excited.
“We still have one of the biggest audiences on the internet, and
that audience has been pretty loyal through a lot of ups and downs,”
he said. “If we just ‘super-serve’ them, good things will happen.”
All contents © copyright 2026 Associated Press. All rights reserved |
