Nothing went wrong with Yahoo Labs, although the public perception might be different. Yahoo Labs was, without doubt, the best applied web research lab in the world, especially around 2010. After the big loss of researchers in 2012, we were able to recover quite well and even improve the business impact the last years, until the last re-org of early 2016. Why the last re-org? I do not really know, but surely was not related to Yahoo Labs' performance. My personal interpretation is that the revenue decline and the pressure that the CEO had from the board needed some drastic business measures to show meaningful (perception) changes. One of them was to move all the researchers under product teams (although we were already working in an embedded fashion) and leave a smaller unit called Yahoo Research (as before Yahoo Labs) in Haifa and New York. The closing of the Barcelona lab in 2015 was similar as they needed to reduce the number of offices in Europe, and Spain was the only country with two offices (and this year the Madrid office was closed too).
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