On the face of it, that Verizon, the wireless and broadband company, has bought Yahoo!, even at the fire sale price of $4.8 billion, seems bizarre. Verizon is a thriving, successful company that specializes in getting you online, not searching the internet when you get there. But Verizon’s purchase makes sense when you realize Verizon wants to boot Google off its wires as much as it can.
Google and the broadband and wireless providers who connect you to the internet are locked in something of a cold war. Google provides not just the search engine, but is also behind Android and its suite of services — from Google Maps to Hangouts to Android Pay. Verizon, in many cases, only sells you the phone and the wireless plan to go with it, and as the industry has been pushed toward lower plan prices and cheaper phones, the company has been struggling to figure out how to be more than a collection of kiosks and wires. It’s become especially urgent as Google uses Verizon’s network and phones to gather data about users and target their ads, something that most internet service providers aren’t a fan of.
Yahoo! has spent years trying to compete with, well, everybody. They offer services similar to Google’s, they (disastrously) got into the original content streaming game for a brief time with the sixth season of Community, they own Tumblr and Flickr, and most importantly, they have a brand. Instead of trying to build Verizon’s services from the ground up, Verizon can simply start pumping out Yahoo! apps to stick into their phones, make Yahoo! your landing page, and hope that people will actually stick around. In fact, don’t be surprised if, like Apple, you have to find and download Google apps on Verizon phones in the future instead of having them come standard.
Verizon has reason to want to try and chip away at Google’s monolithic pile of services. A share of Google stock is worth about 15 times as much as a share of Verizon stock, thanks largely to Google’s enormous targeted advertising business. It’s unlikely Yahoo! will be able to dethrone the search giant, but at $4.8 billion, Verizon might as well take a shot.
(Via Variety)