Following the news of Verizon’s $4.8 billion acquisition of Yahoo, it’s been stated that Verizon aims to make a play on the digital media and content markets to go against Facebook and Google. However, other details of the acquisition have emerged;

Verizon will also be acquiring Yahoo’s ecommerce platform Aabaco Small Business, a platform that allows businesses to create websites and sell online.

It has also been called Yahoo Small Business and Luminate.

Yahoo has tried to sell it before in an attempt to bundle Aabaco into a sale with 384 million shares of Alibaba. That deal was largely designed to help Yahoo avoid some of the massive tax bill on the $7.6 billion Yahoo snapped up when Alibaba bought back part of the 40% of the Chinese company that Yahoo had initially bought for $1 billion in 2005.

Sine Aabaco was part of an operating unit connected to the Alibaba profits, the hope was that taxes could be drawn down. However, this idea was scrapped when the IRS suggested that this move may cost Yahoo billions in taxes.

Aabaco is more relevant than most of us would assume. 41 of the 1,000 largest online retailers in North America use its platform. Considering Yahoo’s struggles, it is impressive that the platform has held on as long as it has.

Verizon has not elaborated on its aspirations with Aabaco.

A version of this appeared in Pymnts on July 27. Read the full version here.

AOL CEO, Tim Armstrong has stated that the Yahoo deal will help Verizon rise to become an advertising player in the big leagues, reports CNBC.

According to Armstrong, the combined power of Yahoo and AOL could be the boost that Verizon Communications needs to become a powerhouse in digital advertising, an arena currently dominated by Google and Facebook.

Trying to do what Google and Facebook does is not a good strategy. We’re the up and comer, we have to have a differentiated performance. – Tim Armstrong, AOL CEO.

Verizon confirmed its $4.8 billion acquisition of Yahoo yesterday in a statement that also stated that Yahoo will be integrated with AOL under the leadership of Marni Walden, executive VP of product innovation and new businesses at Verizon.

Armstrong comments that Google’s power is based on search capabilities, and Facebook’s power is of course, social media. Verizon needs a niche of its own, and Armstrong points out that the company’s strength is in building a house of brands. Regardless, this acquisition could potentially help Verizon in three key ways:

  • Yahoo’s one billion active user base, including 600 million monthly active mobile users will be folded into Verizon’s portfolio. The company will hereby be granted access to online behavioral data on those existing consumers
  • Verizon will also have the ability to place advertising on Yahoo Finance and Yahoo Sports, some of the most trafficked destinations online
  • Yahoo user data could be combined with insights from Verizon’s mobile, internet and cable customers. The access to this information will help power Verizon’s ad technology platforms. It will be able to utilize consumer behavior to determine what kinds of ads to display.

The more access to customer data Verizon has, through cable boxes or mobile, the more targeted it can be with advertising and sponsored content or product placements. – Shar VanBoskirk, Forrester Research  Analyst.

To skeptics online who are underplaying the deal, it is important to remember that under Yahoo includes Flickr and Tumblr, all these sites provide registered user data, which in turn can be used to serve more lucrative ads.

AOL’s programmatic ad platform, One by AOL was one of the main driving forces behind Verizon’s decision to acquire the company. With the acquisition of Yahoo, Verizon will further boost its position with Yahoo’s programmatic video platform, BrightRoll and mobile analytics firm, Flurry.

The deal did not include Yahoo’s Asian assets, including its Alibaba Group Holding stake – it owns 15% of the ecommerce giant, or 35.5% stake in Yahoo Japan. Those assets will continue to be held by Yahoo, but the names will change when the deal closes.

A version of this appeared in CNBC on July 26. Read the full version here.

Verizon has finalized its $4.8 billion acquisition of Yahoo Inc, reports The Wall Street Journal. The company is apparently set to announce the deal on Monday morning (US time), finally ending months of speculation.

The acquisition includes Yahoo’s core internet business and real estate, marking a significant fall for Yahoo, once a Silicon Valley pioneer with market capitalization of more than $125 billion at the height of the dot-com boom. Now it will reportedly be bought for less than a fraction of that price.

For New York based Verizon, the deal adds another piece to the digital media and advertising business the company is trying to build. Verizon plans to keep the Yahoo brand.

And why does a mobile telecom provider want to buy the core editorial business of a faded Internet portal? The short answer is advertising. – Fortune

In a nutshell, Verizon is interested in buying Yahoo’s ad and content businesses for the same reason it acquired AOL last year for $4.4 billion. And that is to build the kind of scale that’s necessary to make money from digital advertising on mobile devices, as growth in the traditional telecom business slows.

“Verizon is trying to pivot its business from analog to digital,” analyst Craig Moffett of MoffettNathanson told the Wall Street Journal. “Verizon believes that a combined AOL/Yahoo would provide the digital advertising platform they need to execute their video reinvention strategy.”

Yahoo’s CEO, Marissa Mayer, is unlikely to have a prominent role under Verizon. She stands to make more than $50 million in compensation if terminated as a result of the acquisition.

Verizon has been a front-runner since the bidding of Yahoo began in April this  year, with a market capitalization of approximately $228 billion. Its digital media arm also includes AOL properties, in which Verizon acquired in 2015 for $4.4 billion.

AOL is another company that couldn’t bounce back after the dot-com crash.

Verizon’s initial competition came primarily from private-equity firms such as Bain Capital, Vista Equity Partners and TPG and Advent International Inc. The company is building a portfolio of online content and aiming to monetize it via advertising. Its current assets include Huffington Post and TechCrunch, which was acquired in the AOL deal. The acquisition of Yahoo will bring in millions more views from popular Yahoo sites such as Finance and Sports.

Google and Facebook will account for more than half of the $69 billion US digital ad market this year. Yahoo’s share is expected to be 3.4% and Verizon properties to hold a small 1.8% share of the market.

Yahoo will also need to decide on the fate of Yahoo Japan Corp, majority-owned by Softbank Group Corp. and Alibaba Group Holding Ltd, considered to make up the majority of Yahoo’s $36 billion market value today.

Update: Verizon’s $4.83 billion acquisition of Yahoo has been confirmed by Reuters.

A version of this appeared in The Wall Street Journal on July 24. Read the full version here.