Highlights:

  • In 2017, when Vespa’s code was open-sourced, the technology was employed to address the challenge of determining relevant content to display to users based on input, such as text entered into a search box.
  • While the official spinoff of Vespa aims to expand platform accessibility, Yahoo perceives it as a strategic maneuver to streamline operations, potentially paving the way for the company’s return to the public markets.

Recently, Yahoo Inc. made a significant announcement, revealing the spinoff of its enterprise artificial intelligence scaling engine, Vespa, into an independent company. The primary objective behind this move is to enhance access to its technology platform, reaching a wider audience.

Vespa originated from Yahoo in 2005 after acquiring a small search firm named AlltheWeb in 2003. The software initially powered Yahoo’s shopping services but was later deployed across other applications.

In 2017, when Vespa’s code was open-sourced, the technology was employed to address the challenge of determining relevant content to display to users based on input, such as text entered into a search box. Fast-forwarding to 2023, Vespa has transformed into a robust big data and AI tool, encompassing a fully-featured search engine and a vector database.

Vespa’s technology forms the backbone of a versatile portfolio comprising approximately 150 applications crucial to Yahoo’s functioning. It plays a key role in delivering personalized content in real-time across all of the company’s pages and effectively manages targeted advertisements. Yahoo reports that this technology caters to an extensive user base of nearly 1 billion people, efficiently handling an impressive load of 800,000 queries per second.

In addition to Yahoo, Vespa has garnered attention from notable users, including Spotify Technology SA, OkCupid Media Inc., Wix.com Ltd., RavenPack Analytics Ltd., OttoGroup Holding GmbH and Co. KGaA, Qwant SAS, and several significant financial institutions whose names remain undisclosed. Yahoo will maintain an ownership stake in the new independent entity and hold a seat on Vespa’s board of directors.

Vespa Chief Executive Jon Bratseth stated, “Given Yahoo’s incubation and advancement of the technology over the years, now is the time to spin out Vespa and allow other companies to take advantage of Vespa Cloud in a meaningful way. With Yahoo’s continued investment and support, Vespa will be able to maintain its position as one of the largest and most sophisticated machine learning and database management platforms globally.”

While the official spinoff of Vespa aims to expand platform accessibility, Yahoo perceives it as a strategic maneuver to streamline operations, potentially paving the way for the company’s return to the public markets. In July, Yahoo CEO Jim Lanzone conveyed to the Financial Times that his objective was to steer the company towards an initial public offering as a crucial step in restoring Yahoo to its former prominent position.

Despite being financially prepared and profitable, Lanzone claimed in the interview that Yahoo’s status as a private company allows it to “make necessary structural changes, creating business units similar to the model used when he was head of CBS Interactive.” That would be clear from the fact that Yespa could be spun off.