After failing to remake Yahoo and AOL into media giants to compete against Google and Facebook, Verizon has agreed to sell both for just $5 billion to the private equity firm Apollo Global Management. Verizon had previously bought AOL for $4.4 billion in 2015 and bought Yahoo in 2017 for $4.5 billion. As part of the sale, Verizon will retain a 10% stake in the company. Both Verizon and Apollo said the deal should close in the second half of 2021.
When Verizon bought the two dwindling companies, they formed a new unit called Oath that AOL and Yahoo were under and were lead by Tim Armstrong who later left in 2018. Guru Gowrappan took over the unit in 2018 and will continue to lead the two companies under Apollo.
In its heyday, Yahoo was once worth over $100 billion but over time the company failed to innovate with new products to compete with newer rival Google for the search market and other productivity tools that Google offered. AOL, likewise, was once a behemoth, infamous for giving out free CD’s to get people to sign up for dial-up home internet connections and the slogan “You’ve Got Mail”. AOL never successfully transitioned into providing broadband service, instead believing they could remain relevant by providing so-called “enhanced” dial-up service at a lower price point than the new pricey broadband will cost.. By the time they realized broadband adoption was the future, they were no longer in a position to begin undertaking the huge cost to build out a large infrastructure for broadband.