Verizon strikes deal to buy AOL

Verizon has reached agreement to buy AOL for $4.4 billion. The deal is expected to be finalized this summer. The deal is seen as a way for Verizon to enter the potentially lucrative ad market on wireless devices. The transaction is yet another sign that wireless video streaming is the wave of the future, and Verizon wants to be at the forefront in this sector.

Recodeoutlines the strategic importance of the deal:

If Verizon keeps AOL intact, it will have acquired a business that’s part ad tech operation, part publisher. AOL is best-known for its Web properties like Huffington Post and TechCrunch, but in the past few years it has concentrated on bulking up on services that help it and other publishers automate their ad sales. That business is growing at a much faster pace than AOL’s content business, but has lower margins.

But the deal also raises potential privacy concerns. The Benton Foundation reports:

Privacy advocates are nervous about Verizon's efforts to gather more detailed personal information about its users for advertising.

"Whether or not the combination of a major online advertiser with the largest mobile-services provider raises substantial antitrust concerns, it raises extremely substantial and urgent privacy concerns," said Harold Feld, the senior vice president of Public Knowledge. "Verizon has already shown an alarming tendency to harvest private information from subscribers to bolster its foray into online advertising."

"With this acquisition, Verizon appears to be tearing down the wall between telecommunications and personalized advertising," said Jonathan Mayer, a computer researcher at Stanford University. "The FCC might have something to say about that."

Verizon Buys AOL for $4.4 Billion (Recode, May 12, 2015)

AOL-Verizon: You’ve Got Privacy Issues (The Benton Foundation, May 15, 2015)

Verizon Bets on Video Ads in $4 Billion Deal for AOL (New York Times, May 12, 2015)