Verizon, a telecom giant seeking to invade the world of digital advertising, buys Yahoo’s core business that include its advertising, content, search and mobile activities for $4.83 billion in cash. The acquisition cost was in exchange for Yahoo’s almost one billion users, including 600 million in mobile, Yahoo’s premium brands in finance, news and sports, and 225 million active Yahoo! Mail users, among others.
This transaction marks the end of an era for web pioneer Yahoo, which has struggled of late to stay relevant amidst the dominance of the two Silicon Valley-based companies Google and Facebook. It was in February this year that Yahoo announced that it was open to being acquired after new CEO Marissa Mayer, could not engineer a comeback. And on Saturday July 22, Yahoo announced that among the bidders which included AT&T, a private equity group led by TPG Capital, an Investor group led by Dan Gilbert of Quicken Loans, it was Verizon that won the process.
AOL CEO Tim Armstrong said:
“We have enormous respect for what Yahoo has accomplished: this transaction is about unleashing Yahoo’s full potential, building upon our collective synergies, and strengthening and accelerating that growth. Combining Verizon, AOL and Yahoo will create a new powerful competitive rival in mobile media, and an open, scaled alternative offering for advertisers and publishers.”
Yahoo, which was founded in 1984 by Stanford University graduate students Jerry Yang and David Filo as a web directory and quickly established itself as the online hub for tens of millions of people. However, in an attempt to build a multimedia business, it strayed from internet search which paved the way for Google. Yahoo also failed to recognize the importance of social networking and was overtaken by both Google and Facebook, which it attempted to buy in their formative years.
Verizon apparently wants to compete with the two giants and at least occupy the third spot. It started with the move to boost its media and advertising business acquiring AOL for $4.4 billion in 2015 . After the two acquisitions, Verizon plans to merge Yahoo and AOL and form a bigger advertising and media subsidiary in the hope of becoming an advertising giant that could reach billions.