Nobody wants to be a dumb pipe. With the FCC breathing down its neck about net neutrality and common-carrier regulation, Verizon has decided to double-down on the media side of its business, picking up a huge video advertising company and video production house with its $4.4 billion acquisition of AOL.
Don't think of AOL as the publisher of Engadget; that's the least interesting thing from Verizon's perspective. Under current CEO Tim Armstrong, AOL has spent more than a half-billion dollars rolling up advertising technology companies that are completely incomprehensible to the average consumer and turning them into something called "AOL Platforms," which helps advertisers very tightly target the consumers they want, and therefore get more bang for the buck from their ads. That business wasn't profitable this quarter, but it's growing fast. AOL's technology linked with Verizon's data about its own ISP and mobile users will be a powerful combination.
AOL's video content will also be important, it looks like. Apparently, younger people don't watch TV, so "the company is laser-focused on delivering a mobile-first video experience targeted at millennials because it believes they consume video very differently," according to Verizon EVP John Stratton, as paraphrased by Fierce Wireless.
So Verizon the TV company is buying AOL in part to be able to create and promote next-generation TV-like content, and Verizon the ISP is buying it to be able to play heavily in Web and online advertising. Makes sense.
Whither (Wither) Engadget?
To me, and probably to you, the biggest question is what happens now to Engadget, TechCrunch, and to a lesser extent, The Huffington Post.
Let's be honest here: Engadget is a proud and storied name in tech blogging. TechCrunch has one of the best writers I've ever known in our industry, John Biggs. The Huffington Post is an ugly aggregation sinkhole that reminds me sometimes of Quora redesigned by Matt Drudge.
I don't think any of these things matter that much to Verizon, and in fact, they may be more trouble than they're worth from a conflict-of-interest perspective. Former Engadget editor (and PCMagger) Brian Heater said on Twitter, "When I was with Engadget, we rarely reported on AOL. Verizon news is like an hourly occurrence." And back in January, TechCrunch editor Alexia Tsotsis joked, "Though if Verizon did buy Aol, @panzer and I would pivot Techcrunch into 24-7 coverage of Net Neutrality and NSA issues."
Tsotsis's joke—if it was a joke, which you never know with her—refers to Verizon's attempt to start a blog called SugarString, which was forbidden from writing about the NSA or net neutrality. It imploded under the weight of all the bad press it got.
Verizon isn't just going to shutter the content businesses—it is profitable as a whole, although I don't know whether that's true about each individual blog. And analyst Jan Dawson makes the solid point that Huffington Post, with its heavy rotation of lifestyle videos and loosey-goosey ethics, might be totally c