Verizon Completes It’s Web 1.0 Roll-up, But May Not Stop There

With its $4.8 billion acquisition of Yahoo this week, coming a year and two months after its $4.4 billion acquisition of AOL, Verizon now owns the two dominant players in the web ecosystem — circa 1999. But at least it got them cheap.

Yahoo once had a market cap of $125 billion; AOL’s reached $224 billion in the immediate wake of its January 2000 acquisition of Time Warner — roughly the same as Verizon’s market cap today. So, scooping up both for less  $10 billion could be considered a steal.

YAHOO_headquartersThe question is, why bother? Neither AOL nor Yahoo is exactly dominant in its market today. In Yahoo’s case, it isn’t even clear what that market is. Even in announcing the sale to employees, Yahoo CEO Marissa Mayer could barely articulate a coherent description of what it is Verizon was buying, let alone why.

At best, Verizon is getting, in AOL and Yahoo, a disconnected assortment of online media properties and a pair of online advertising businesses built around display, rather than search, social, or mobile — the dominant modes of digital advertising today. While Verizon’s distribution reach in mobile may be able to breathe some new life into some of those media assets it has a long, long way to go before it could seriously challenge Facebook and Google, the dominant players it today’s digital media distribution and advertising ecosystem, if that’s really its goal. Read More »

Verizon Opts Into AOL

Verizon is the largest wireless service provider in the U.S. with over 108 million retail connections as of the first quarter of 2015. But as the wireless business matures, providing connectivity is increasingly a zero-sum game among the four national carriers — Verizon, AT&T, T-Mobile and Sprint — leading to price wars in pursuit of marketshare and threatening margins.

Verizon_HQVerizon’s efforts to find new ways to monetize its user base, such as through advertising, however, have met with mixed results at best. It’s use of undeletable “super cookies” to track its subscribers’ web surfing, and the sale of those data to third-party marketers, led to an outcry among consumers and privacy advocates (and scrutiny from the Federal Communications Commission), which forced Verizon to allow users to opt-out of the program.

Now though, with its $4.4 billion acquisition of AOL, announced Tuesday, Verizon is gaining a portfolio of over 100 million device IDs from consumers who have opted-into direct, content-based subscription relationships with AOL’s media properties. From a data-collecting perspective (to say nothing of the legal and regulatory implications) that’s a much safer starting point than anonymous, surreptitious tracking. But those opt-in content relationships will also provide a foundation for the launch later this year of Verizon’s own opt-in over-the-top video service. Read More »