The end of Yahoo

 

Yahoo was the first website I ever visited. My Dad took me and my brother to an internet cafe in central London, and there it was - an exciting portal to the world wide web. Without it we'd have been completely lost.

That hand-holding portal was at one point worth a staggering $125bn. Today, it was sold for $4.83bn (£3.7bn) to US mobile network Verizon.

That's a remarkable amount of money for a company whose name has become shorthand for online businesses falling from grace. Last quarter, Yahoo lost $440m. It may have made its name by helping us make sense of the web, but it's long been clear that other companies do that job far better, and make much more money doing it.

But Verizon won't care about that. They want eyeballs. Bums on seats. People through the door… and on that measure, Yahoo delivers. Collectively, around a billion people flow through Yahoo's sprawl of web properties at least once a month.

Verizon is now likely to merge Yahoo with AOL, the company it bought last year for $4.4bn. A Yahoo-AOL pairing has been expected for years. The companies are like two high school friends who everyone knew would eventually get together, but only when the time was right. Or maybe when they were both a bit desperate.

Anyway, Verizon's strategy in marrying the companies is to create a massive content network of well-respected web properties. Sites like Huffington Post, Engadget, Yahoo Finance and TechCrunch will now all deliver advertising for Verizon, advertising that can be more effectively targeted given what Verizon knows about its mobile customers.

It will help Verizon compete with Google and Facebook, who are way out in front when it comes to market domination of online advertising.

But such is the size of the industry, being in third place would be extremely lucrative for Verizon. That's what this deal is all about, and that's why Yahoo commanded such a big price tag even though it has dropped off most people's radars in recent years.

Yahoo couldn't do it alone - it simply doesn't have enough data on its one billion or so monthly users to target and personalise ads in the way Google and Facebook can.