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Verizon takes a $5bn punt on combined Yahoo and AOL

Yahoo’s web business is being sold to US telecoms giant for $5bn, adding to Verizon’s online pot which includes AOL. Verizon bought AOL for $4.4bn last year.

Yahoo will therefore no longer be an operating company but the owner of a 35.5 per cent stake in Yahoo Japan and 15 per cent of Chinese online business Alibaba. Alibaba is valued at $210bn.

The sale brings an end to the controversial reign of Yahoo CEO Marissa Mayer (below), a former Google exec whose many and varied attempts to restore the the one-time search giant’s former glories have failed.
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$5bn is small change for the mighty Verizon, which bought out Vodafone’s half share in its US mobile business for $130bn in 2014. But can a combined Yahoo and AOL challenge internet giants like Google and Facebook?

Google’s vast empire is still based on search despite its numerous other ventures. Facebook has a simple and economical business model that has adapted better than its rivals to the exponential growth in mobile and the advertising that goes with it. Both so-called “technopolists” have used their cash piles to buy rivals before they can threaten their status and revenues: Google with YouTube, for example.

Yahoo/AOL will be an online content business, dependent on advertising with no killer e-commerce application like Google’s search. It may survive but is hardly likely to become a technopolist in its own right.

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