Verizon Communications Inc. (NYSE:VZ), America’s largest wireless carrier, announced plans to buy out AOL, Inc. (NYSE:AOL) for $4.4 billion. As the part of the deal, Verizon will get the ownership of AOL’s websites such as the Huffington Post, TechCrunch, and Engadget. It will also have rights over AOL’s programmatic advertising technology. Incidentally, AOL bought Adapt.tv in 2013, a platform that links the purchasers and sellers of online video advertising.
According to industry analysts, the purchase is all about advertising. Also, Verizon’s goal is to leverage AOL’s technology to deliver highly and better-targeted video ads. Experts opine that AOL has ceased to be a major Internet service provider or a portal. It is now an advertising technology firm. From that perspective, the deal is pretty logical. Verizon has ample monetary reserves, and the deal amount is less than half of the firm’s total profits last year. For many years, Verizon has endeavored to launch a video service. Its goal is it to get a share of the mobile video advertising market.
AOL has a host of video channels providing tips on diverse topics delivered with a compulsory ad at the beginning. It is unclear whether Verizon wants to retain this part of the business. It already has content deals in place with media firms for its FiOs Television service and its negotiating more deals for its upcoming mobile TV offerings.
It appears that Verizon is likely to retain Tim Armstrong, the former Google Inc (NASDAQ:GOOGL) executive who has helmed AOL for the last six years. He has considerable expertise in the digital advertising space in which Verizon is very interested.
Privacy advocates are concerned about Verizon’s attempt to garner more detailed personal data regarding its users for advertising purposes. The merger of a major online advertiser with the biggest mobile service providers raises considerable and urgent privacy issues. Verizon has a history of harvesting private data from subscribers to boost its online advertising venture.