Verizon Wants $1 Billion Discount After Yahoo Scandals, Still Fancies Itself The New Google

Say That Again

from the we're-innovative-if-we-say-we-are dept

With wireless and fixed-line broadband growth slowing, Verizon has been steadily expanding into new growth territories to try and please insatiable investors. So far, that apparently includes buying failed 90s internet brands like Yahoo and AOL in the belief that it can somehow become a Millennial advertising juggernaut. Except that hasn’t been going particularly well, as the stodgy old telco realizes that it’s kind of hard to innovate when you’ve spent the last thirty years bumbling about as a government-pampered telecom monopoly almost solely focused on turf protection.

And things have been going notably worse for Verizon over the last month, as the company has acknolwedged that Yahoo failed to reveal not only the 2014 hack of 500 million user accounts, but also its recently disclosed wholesale e-mail spying for the U.S. government during negotiations. That has prompted rumors that Verizon is looking for a billion-dollar discount off the original $4.8 billion Yahoo asking price:

“In the last day we?ve heard that [AOL boss] Tim [Armstong] is getting cold feet. He?s pretty upset about the lack of disclosure and he?s saying, ?Can we get out of this or can we reduce the price??? said a source familiar with Verizon?s thinking. That might just be tough talk to get Yahoo to roll back the price. Verizon had been planning to couple Yahoo with its AOL unit to give it enough scale to be a third force to compete with Google and Facebook for digital ad dollars.

Of course “scale” isn’t enough to compete with Facebook and Google when you lack anything resembling disruptive or innovative DNA, though Verizon seems intent on learning this the hard way. Verizon CEO Lowell McAdam says the company has no intention of backing away from the deal, and continues to insist that despite Yahoo being a vicious shitshow, it’s the missing link necessary to transform Verizon from stodgy old telco to innovative advertising juggernaut:

“I think, and we?ll see how AOL and Yahoo come together, but I think that entity can be easily one of the top three,? McAdam said at the conference. ?I think we can provide the content and applications that will stand up with anything that goes up on the West Coast.”

Right. But so far, there’s absolutely zero indication that’s going to be the case. One of the key cornerstones of Verizon’s attack plan has been Go90, a new streaming video service tailored to Millennials. The problem? Those advertising and content partners McAdam claims are so excited about Verizon’s entry into the market think the platform is a disaster of colossal proportions:

“Early on, we thought the platform had promise, but it was an absolute dud when it launched,? says one Go90 publishing partner. ?We get the sense that unless you?re one of the premier folks they paid piles of money to [for original content], there isn?t much there from a traffic perspective,? said another. ?Based on the plan they had originally laid out, it would have been a mid-tier platform for us ? millions of views per month, at worst ? but it?s turned out to be far, far worse than their projections,? says yet another.”

Fancy! So not only did Verizon gobble up a number of underwhelming 90s internet brands in the hopes of striking it rich in content, its own foray into content has been painfully underwhelming (something that should have been apparent to anybody who remembers Verizon’s first, brief attempt at original content, SugarString). Combine that with the money Verizon will have to dole out once the lawsuits over the Yahoo hack begin flooding in, and you’ve got the kind of pivot and metamorphosis that makes Jeff Goldblum’s experience in The Fly look arguably pleasant.

Filed Under: hacking, mergers, security, surveillance
Companies: verizon, yahoo