Yahoo! Acquires AOL; slaps Microsoft in the Face

By Steve Poland   •   February 5, 2008

OK – Not really. But honestly, I’d love to see Yahoo! blow off Microsoft and swing back with the purchase of AOL. I don’t think a merger of Yahoo! and Microsoft could really do anything. Microsoft wants a piece of search, which is the reason they are going after this. But in reality, I’m not sure the merging of these two behemoths would change people’s minds to use either of them for search if they aren’t already.

Now let’s talk about AOL. I honestly think AOL and Yahoo! together could be a good fit. AOL has been secretly amassing quite the conglomerate of advertising companies — they have their hands in basically every link of the chain for monetizing the Internet (via advertising). AOL also still has a strong consumer brand, which is what Yahoo! is.

AOL has shifted their strategy with all of these Advertising company purchases and a move away from being an ISP. Google owns 5% of AOL (at the time it valued AOL at $20B). I’d love to see Yahoo! purchase AOL, sell-off all the dial-up/broadband ISP-related activities to United Online (Juno, NetZero) and/or a Comcast (broadband), and take over more pieces of the web (AOL.com) — and make use of all their advertising companies to become the Display advertising behemoth of the web. Let Google keep going strong on search, but start focusing on highly-targeted display advertising using behavioral tracking mechanisms — and link up with other Sites on the web, allowing them to contribute user data anonymously, which then increases the CPM’s of their own ad inventory.

Yahoo! also just purchased Maven networks, so they are getting into video advertising too (apparently the reason they bought them was for their video ad serving technology).

So to recap — Time/Warner: Sell AOL to Yahoo! for cash or straight stock.

Yahoo! AOL would own tons of eyeballs on the web. (Someone should do a further analysis on this whole idea; I’d be curious about the effects: internationally; how all the ad companies would complement each other; etc)

I’m not the first to talk about this possibility, back in late 2006 Fortune spoke about it.




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