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Verizon acquiring AOL for £2.8 billion in all-cash deal

US broadband and communications giant Verizon has acquired AOL for $4.4 billion (£2.8 billion) in an all-cash deal.

The deal hands The Huffington Post, Engadget and TechCrunch over to Verizon, a dubious move considering the company's past editorial dealings, forcing writers of SugarString not to write about net neutrality.

The news sites are not the main reason Verizon acquired AOL, instead focused on the video and mobile advertising division. AOL has quietly been growing into an advertising behemoth, and Verizon wants a slice of that advertising venture.

Verizon was reportedly in talks with AOL a few months ago over ad deals, but instead of partnering it is acquiring. The wireless giant might use AOL’s advertising division for its own Internet services, which may include live TV services in the near future.

AOL already has strong mobile advertising share, meaning Verizon can enter into that space too. Verizon was planning to add “supercookies (opens in new tab)” onto more than 100 million smartphones this year, in order to gain more personal information on its customers, allowing Verizon to deliver contextual advertising on mobile.

Even though that plan failed when Verizon u-turned its “supercookies” idea, the AOL acquisition gives them a platform to sell mobile adverts to business customers.

Verizon may also be able to push AOL’s profitable dial-up division into the 21st century, by moving customers from dial-up to Verizon’s own high speed broadband. AOL has 2.1 million customers on dial-up, an outrageous amount in 2015.

Even though AOL is a shadow of the dot-com giant that acquired Time Warner in 2000 for $164 billion (£104 billion) - which would be $253 billion (£161 billion) today - it still has some inherent value with executives like ex-Googler Tim Armstrong and Arianna Huffington. Verizon has not discussed how it will maintain neutrality with the news sites, although Engadget claims it will remain independent (opens in new tab).

David has been a technology journalist for over six years, covering a wide range of sectors. He currently researches apps, app sectors and app markets for Business of Apps, and has written for ITProPortal, RTInsights, ReadWrite, and Digital Trends.