Sad, but true.

It pains me to say this, because I really like Yahoo as a company, and to this day, prefer many of their offerings to those of their competitors, but they have fallen behind and only have themselves to blame.

I think this problem is not exclusive to Yahoo, but rather pervasive among many large corporations. When they are young, they are agile and able to move quickly. When they grow, they become unable to cut through their own bureaucracy to get anything done. Any innovation has to get past committee after committee, demonstrating beyond any possible doubt that the poor shareholders won't lose out.

Of course, it's impossible to provide data that proves that anything truly new and innovative won't hurt shareholders (if there were data available, it wouldn't be new, would it?). Therefore, nothing truly innovative is permitted to move forward by the hoards of stodgy board-members and execs that grow up like weeds around expanding corporations.

I think that they were too late to stop or one up the competitors. It wasn't just innovation but also there internal marketing was not that great.