While regulators and Yahoo’s shareholders still have to approve the move, the purchase is expected to be finalized at the beginning of 2017. The purchase does not include Yahoo’s shares in e-commerce company Alibaba or Yahoo Japan.
Yahoo was founded in 1994 by electrical engineering students Jerry Yang and David Filo as a hierarchical directory of websites. By the late 90s, Yahoo had become one of the most popular start points for Internet browsing, and the company’s shares had risen to an all-time high of $118.75. With the growth of post-2000 social media giants Facebook and Twitter, Yahoo struggled to maintain its premier status online. Since then, the company has expanded into, and purchased, a wide variety of digital products — from Yahoo mail and messenger, to blog platform Tumblr and photo-blogging site Flickr. Yahoo remains one of the most visited destinations on the Internet.
Rumours of Yahoo’s sale have been growing over the course of the last year. Yahoo’s 15 percent shares in Alibaba have grown so valuable — now at $32 billion — that the product and development side of the company have become a mere fraction of the company’s real value, with unfortunately diminishing returns. Despite the efforts of CEO Marissa Mayer to resurrect the fortunes of Yahoo’s media and tech business branches, shareholders have remained critical over the last few years, and pushed for a sale.
As Consumerist points out, the price Verizon is paying for all of the company’s Internet properties is a mere shadow of Yahoo’s peak market value of $125 billion.
In a press release Monday, Lowell McAdam Verizon Chairman and CEO said the following:
“Just over a year ago we acquired AOL to enhance our strategy of providing a cross-screen connection for consumers, creators and advertisers. The acquisition of Yahoo will put Verizon in a highly competitive position as a top global mobile media company, and help accelerate our revenue stream in digital advertising.”
The purchase comes quickly after Verizon’s acquisition of AOL last year, indicating that Internet properties fit into a larger plan for online advertising space and the wireless company. As Monday’s press release emphasizes, Verizon’s key interests in AOL came in the form of the Internet media companies like Huffington Post and TechCrunch, and all the advertising opportunities they provide. The communications giant hopes to merge AOL and Yahoo to form a single, bigger advertising and media wing, capable of competing with Facebook and Google.
Verizon is the largest wireless communication service provider in the U.S., and with the purchase of Yahoo, now stands as the sole purveyor of two of the biggest dot-com era internet businesses.
What does it mean for internet users? With its historic popularity and pedigree as a search engine, Yahoo certainly provides Verizon with advertising opportunities. But as Quartz makes apparent, the new, burgeoning audience of millennials may not necessarily come flocking to Yahoo or AOL any time soon. The biggest assets from this purchase will remain the media and ad-targeting data available through Yahoo technologies. Whether these assets help Verizon move into the new world of social media and marketing that Facebook and Google thrive in remains to be seen.
