Setting an example for other telcos

Daniel Domberger, Partner at Livingstone, comments on news that Yahoo! is to be acquired by Verizon and what it might mean for the convergence of the telco and content industries.

“Yahoo! has never reconciled its conflicted position – neither a technology nor a content business. Perhaps it’s no surprise, therefore, that Yahoo! now accounts for around 3% of global digital advertising, compared to around 20% in 2004-2006.”

“Yahoo! has spent years seeking new ways to monetize a wasting asset. One failed move included its Tumblr takeover, which was supposed to be a multi-billion play into social media, but which failed to deliver any synergy or value, and has withered post-acquisition.”

“But for Verizon, this acquisition might not be foolish, and could help it position itself as more than just a ‘dump pipe.’ Verizon already owns AOL. While putting together two has-beens might not make a modern champion, both Yahoo! and AOL have accumulated a lot of knowledge about their users.”

“This model may well set an example for other telcos, demonstrating how they can capture more value without resorting to traffic prioritisation or tiered network access. With this approach, Verizon is likely to do a much better job of extracting value from Yahoo!’s legacy audience.”

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