Verizon has announced that it will purchase AOL for a whopping $4.4 billion, a deal which will give Verizon mobile advertising technology to help it compete with the likes of Yahoo and Google.
In fact, many suggest that the acquisition could force Yahoo CEO Marissa Mayer to sell the company, or to spend big bucks in order to improve its mobile ad technology.
Despite this, some even suggest that the deal actually helps make Yahoo look more attractive.
"The interesting thing for Yahoo is to figure out if the company will continue being the acquirer, as it has been of late, or whether it will finally fall prey to a Comcast or other communications giant," said James of McQuivey Forrester Research.
The deal is likely to cause other large communications companies, such as Comcast and AT&T, to start looking very seriously at acquiring Yahoo, largely because of the fact that Yahoo and AOL are such similar companies, with one key difference in their mobile advertising capabilities.
In fact, analysts have long suggested that Yahoo should seriously consider buying AOL itself, in order to be able to better perform when it comes to things like mobile advertising. Mayer, however, has long held to the belief that purchasing AOL would be a bad decision for Yahoo, and now will no longer have to deal with investors saying that it should.
Despite this, Yahoo has a long road ahead of it. Verizon's purchase of AOL makes it one of the first U.S. wireless companies to have a global presence in advertising, a presence that other telecommunications companies are unlikely to take lightly. Yahoo is finding itself increasingly irrelevant in areas like advertising and search, which are dominated by the likes of Google. Yahoo does offer its own programmatic advertising platform; however, this platform is not nearly as comprehensive as Google's. Of course, AOL's tech is also riding backseat to other companies, but combined, it is likely that these two companies could have made serious waves in the online advertising market.
Yahoo, as an acquisition target, only has one thing standing in its way. The fact that Yahoo holds such high stakes in Alibaba and Yahoo Japan makes Yahoo an expensive company to buy. While it is possible that the likes of AT&T will be looking at purchasing their own companies to compete with Verizon, it is more likely that Yahoo will be looking at acquiring companies in order to compete on its own. Of course, this idea has a problem of its own because there are not so many smaller companies in advertising that the likes of Google and Facebook have not already looked at purchasing.