Schadenfreude aficionados and tech scene navel-gazers will have to find a new subject of interest: Yahoo has finally found its suitor in Verizon. While there had long been rumors of AOL and Yahoo merging, or acquiring one or the other throughout the two firms decades-long history, it ended up that one company acquired them both. With news that Yahoo will be subsumed by AOL, it seems the latter brand “won” by being acquired first.
So why Verizon, and what should we expect from the company going forward?
First of all, what’s in it for Yahoo (outside of the fact that Yahoo had to do something)? As Marissa Mayer (who is staying on) put it in her externally shared internal memo:
As one of the largest wireless and cable companies in the world, Verizon opens the door to extensive distribution opportunities.
Why is Verizon vacuuming up distressed Silicon Valley assets?
The Washington Post hits on a number of reasons, the most convincing is that Verizon wants to own more of the mobile content and advertising market, and the merger of Yahoo and AOL will produce cost cuts, efficiencies and greater opportunities.
Less discussed is the idea that market forces are not shaping up to be kind to traditional wireless carriers. The explosion of third-party messaging apps severely dented one of wireless carriers’ biggest revenue streams – text messaging. WiFi expansion projects by Google and other third parties makes it much easier to go with a smaller data plan. Perhaps one day the idea of paying for wireless data will be a relic. Verizon—and other telecoms and wireless providers—need to diversify in the face of a changing economy.
The Marissa Mayer brand has suffered great degradation since she took on the Yahoo reclamation project. It’s hard to remember that she was a product wunderkind at Google, and had an innate sense of what the consumer wants. If she stays (Yahoo savant Kara Swisher says she will leave after the transaction is completed) Marissa Mayer can focus on product now, and not have to worry about the pressure of saving a sinking business.