Tech Talk: Yahoo Is The One Betting On Verizon

Yahoo, long mocked as a dinosaur of a web company, recently handed over all of their core assets which is essentially their entire business, to Verizon for the somewhat princely sum of $4.8 billion. This was the end result of a long, complicated transition that was just a little bit more down than up, with a mass user exodus being the final nail in the core business' coffin. Attempts to ease the landing before Yahoo hit rock bottom were valiant, with efforts by CEO Marissa Mayer to do things like invest in Yahoo products for further development and to try to save Yahoo's moonshot factory, becoming the hallmarks of what would come to be known as Yahoo's final year as an independent company. Many insiders and industry watchers have been seeing the pieces click into place since the early 2000s, but there are a lot of people out there scratching their heads. What could have brought such an internet giant to their knees in an era like today, where the overwhelmingly dynamic legion organism that is the internet is the king of daily life? There are actually a very large number of factors, but what's important now is Yahoo's uncertain future.

To see exactly what kind of pit Yahoo may fall into, one needs only to look at early rival AOL. This is a company that ruled the roost back in its heyday, much like Yahoo did. Once upon a time, when Google was just a couple of crazy college kids gathering some smart friends together to help with a search engine, Yahoo was what Google is today, and AOL still held all the cards. How? By being an ISP and a sort of hub all in one. AOL users from back then will remember the iconic sounds that prefaced a trip into AOL's browser. With the rise of low-cost, convenient competitors like NetZero, who let users choose their own browser and eventually ushered in the early rise of Opera and Firefox, AOL found their core business falling apart, and scrambled to save what they could. AOL Instant Messenger remained somewhat popular, as did AOL Mail, and AOL's various media properties. Some people even continued to use the site as a full-on hub. Their decline, however, was inevitable; in the face of a changing internet, they continued to try and rule by brute force, and they paid for it by being bought up. Verizon used them to expand their advertising, web presence, and media, and left them largely as they were. So, is this the fate awaiting Yahoo?

To know how things will play out for Verizon and Yahoo, we need to look to two sources; Yahoo's path to their current shape, and how Verizon has historically treated acquisitions. On the first topic, it's a tale that many are pretty familiar with. Over a decade in the making, Yahoo's decline on the back of what were essentially a long series of right calls made at the wrong time is a story for the ages, culminating in a futile effort to buoy their sinking ship with Tumblr. So, after things went south, why exactly was it Verizon that Yahoo eventually sold out to? It was an arrangement of mutual benefit, according to at least one insider. Eric Jackson who is a Yahoo activist investor recently revealed a good bit about how the ship sank and how the deal worked out. Essentially, the mixed reaction to CEO Marissa Mayer and her relative failure to revitalize the company, which some said was a lost cause by the time she came over from Google, was a good microcosm of investor and user sentiment about the company's recent overall exploits. While a number of suitors popped up, Verizon stood out. They already had experience keeping an internet dinosaur, AOL, on life support, and had the mass appeal and mass media mission that Yahoo could use to boost public opinion. Verizon also had a ton of capital to burn, which could help Yahoo to keep some of their more experimental projects afloat on the back of a big money offer to buy. All of those factors considered, it was just a matter of Verizon exec Marni Walden looking at Yahoo with the same eyes she saw AOL with, and it was pretty much a done deal.

So, on the matter of the future, what's in store for Yahoo? Will their stake in Alibaba play into any of this, since Verizon now owns that? For the closest thing anybody will be able to get to an answer for now, we should look to Verizon's future plans. While Yahoo may now have an extra $4.8 billion to play with, any time spent in the tech industry will teach you in short order that money is meaningless, no matter the amount, unless it's spent correctly. When the acquisition happened, Yahoo was busily expanding their enterprises and investing in improvements to products that used to get a lot of traffic; in all likelihood, this will continue. As for Verizon, they're looking to use Yahoo as a media stock, a face, an advertising force to be reckoned with, and a foothold in the wild world of the web economy. Yahoo's Alibaba stake puts Verizon in a unique position; this is the first time their rule crosses borders in any kind of major capacity, and nobody's quite sure yet how they'll react to and use that influence. Altogether, the future under Verizon looks fairly bright to a Yahoo that will be largely left to its own devices, but looks can always be deceiving.

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