Verizon announced Tuesday morning that it had signed an agreement to purchase AOL for approximately $4.4 billion.
Why would a company best known for mobile phones buy a company best known for dial-up Internet?
One answer is that phone companies are now Internet providers, and they’re seeking to make more money off the content that flows through their pipes. “On both the mobile and the fixed broadband side, that’s kind of what these guys are worried about is being reduced to just pipeline,” says Brian Haven, senior analyst covering consumer mobile services for IDC.
By purchasing AOL, they purchase digital content properties like TechCrunch and the Huffington Post. But the “principal interest” for the deal was AOL’s “ad tech platform,” according to Verizon president of operations John Stratton, speaking at a conference shortly after the merger announcement.
In other words: The primary reason Verizon bought AOL was for technology that will help the company sell ads on its coming forays into content—including, perhaps, the mobile video product set to launch this summer.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.