Verizon buys Yahoo, puts it in competition with Facebook, Microsoft and Google: Analyst

Yahoo, that has been restructuring its business for year now, finally sold out to Verizon. Verizon sealed the deal for $4.83 billion, all in cash.


Yahoo, that has been restructuring its business for year now, finally sold out to Verizon. Verizon sealed the deal for $4.83 billion, all in cash. This acquisition gives Verizon access to Yahoo's advertising technology tools such as BrightRoll and Flurry, assets such as Search, Mail, Messenger as well as real estate, among others. The deal is expected to close in Q1 2017.

Some experts believe that Yahoo has almost become a non-entity, but it is a great deal for Verizon. "Even with almost a billion visits per month, Yahoo had already become a non-entity with momentum having shifted from its core offerings to competitors years ago. The deal is good for Verizon because it has come at a fair price and they can leverage some of the capabilities in their digital offerings," said Ashutosh Sharma, Vice President, Research Director, Forrester Research.

Impact on Industry

Breaking down the layers, Sanchit Vir Gogia, Chief Analyst and CEO, Greyhound Research explains this acquisition has only put Verizon in the big mobile advertising and mobile marketing space. So, far there were three players - Facebook , Google and Microsoft with its recent acquisition of LinkedIn.

For Verizon, selling Internet services and devices have been its bread and butter. Increasingly the big spend is going in content and advertising and back-end technology that supports advertising and content revenue ultimately. Looking at Facebook's strategy, it has been teaming up with publishers etc to improve content strategy and at the same time it is developing brilliant advertising technologies for it to support increasing revenues. But, recently it has been investing in projects like free Internet for everybody such as the failed attempt at Internet.org in emerging nations like India and now its new open source platform. The reason is simple - the more people come online, the better it is for Facebook. Similarly, Google is doing a fantastic job with content search and advertising. Google also started with fiber and other Internet projects like balloon to get more people online.

"The space is of three folds - data and Internet, content and advertisement and back-end technology to support it. Verizon does a fantastic job with data and Internet services and even bought AOL last year to beef up content and advertising. Ultimately, in the game of mobile marketing, the person with biggest network is the winner. Verizon has a base of Internet services already. Now, to beef up their network they have added Yahoo so that the firm comes up with its own content brand and advertising tech. This will put them in competition with Google, Facebook and Microsoft," Gogia explains.

"While internet, telecom and media have been on convergence path for sometime, this merger will impact all three of them but in a somewhat different manner. It might be ironical that the industry which Yahoo is most known for, Internet, probably won't be impacted much, not at least on surface. In this I include things like search, Mail, Tumblr. Verizon's ownership may impact digital advertising and media side of Yahoo more than anything else," explains Ashutosh Sharma, Vice President, Research Director, Forrester Research.

Telcos and enterprise

Gogia further explains how Verizon has a base of Internet services already and also the enterprises side. Now, it can sell marketing services to its enterprise services. It already works with a lot of publishers and others with technology and enterprise accounts. "Verizon's current enterprise base will act like a huge plus as money can be accrued out of enterprise accounts," he adds.

On a similar note, Sharma adds that the content and media is moving online, and for a telco, it is a survival question to get into areas that have not become highly commoditised. "I think there is a lesson for everyone - especially for internet giants of today. It is a very unforgiving industry. More than being happy or sad - the competitors of Yahoo will certainly be watching it closely and take lessons from its fall from glory," Sharma said.


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