Two weeks ago, telecommunications giant Verizon purchased faded internet star Yahoo for a whopping $4.8 billion. Following the announcement, many asked simply, “Why?” Though most of us abandoned Yahoo search years ago in favor of Google, its web properties continue to attract over a billion monthly users, 600 million of which are on mobile devices. These users continue to utilize Yahoo’s search engine, email portal, news sites, and services like Flickr and Tumblr.
A Pattern of Powerful Partnerships & Acquisitions
Last year Verizon purchased another internet dinosaur, AOL, for $4.4 billion. Similar to Yahoo, AOL had previously transitioned its focus to news reporting and content creation, and away from email and chat features.
Then, earlier this week, Verizon Yahoo also announced that it had partnered with streaming giant Hulu to develop a TV viewing platform. The platform, called Yahoo View, will combine entertainment streaming, as well as GIFs, photo editing, and more. The idea behind the integrated service is to capitalize on content-driven communities, akin to Tumblr and Yahoo Sports.
What the purchases of AOL and Yahoo, and the partnership with Hulu, tell us is that Verizon is no longer satisfied with providing the hardware and network through which users stream and navigate content, focusing instead on obtaining a significant piece of the $69 billion per year digital ad industry.
So, what does this mean to consumers?
Until now, the Verizon network and its products have simply been the method by which information and searches flow. However, with the acquisition of content-producing companies AOL and Yahoo, Verizon now has the ability to control what content its users access. This is yet another example of the growing importance of social media, paid ads, and user integration across search channels. Verizon knows that its greatest future earnings will come from content creation and management as more and more users desert traditional news outlets in favor of third-party social media platforms.
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