Yahoo + AOL = Oath

A merger is often a combination of two different companies resulting a large entity.

Usually the purpose behind the mergers is usually to enhance the operational as well as financial
strength of both the entities. The process of merger involves both entities transferring their
ownership via cash payment or stock swap between the two and both the companies surrender
their own stocks to issue a new stock in the name of merged entity (Cesonius, 2017).The merger
of Yahoo and AOL is in news for quite a long time where they have recently merged their
operations a couple of day back on June 13th, 2017 when the AOL’s parent company announced
the completion of $4.48 acquisition of Yahoo and its merger with AOL to form the new entity
named Oath (Russel & Goel, 2017).
Economic Justification: In September 2017, Yahoo announced that the personal data of
over 500 million users has been stolen. The business was anyways not doing great after the
growing popularity of Google, Apple and other strong players in the market. Yahoo was already
running in huge losses where it reported loss of around $4.4 in the last quarter of 2015 (Russel &
Goel, 2017). The company has reportedly lost its competitive edge to Facebook and Google
where it has monthly volume of more than a billion users which no one else has in the industry
apart from Google and Facebook. Despite of the fact of more than 20 years old individual
company running in losses and diminishing popularity, Verizon is keen on this deal and wants to
merge AOL with Yahoo just because one reason which is advertising techniques which Yahoo
owns today. It has more than a billion users using its different services like yahoo finance,
emails, search engine, sports scores and more where it uses its advertising technology which it
has either developed or acquired in past (Ingram, 2016). With the same reason, the telecom
company Verizon shown interest in acquiring AOL so that it can step in to the digital market and
now the aim is to increase the span or its reach to the customers in the world.
Antitrust Concerns: The antitrust concern usually comes in picture if the purpose of a
merger or post-merger effects depict rise of monopoly or reduced competition. However, here in
case of the merger of Yahoo with AOL resulting in Oath, the after effects will be to gain
advantage in the field of advertising by Verizon. The company wants to use the advertising
techniques owned by Yahoo and grow its market in digital world. Apart from this, there seems to
be no role of government in this merger

Cesonius Holding ltd (n. d.). Retrieved from

http://cesoniusholding.com/
Russel K., & Goel V. (2017, June 13). Why Yahoo sold its internet business. Retrieved from
https://www.nytimes.com/interactive/2016/technology/yahoo-sale.html
Ingram, M. (2016, April 19). Here’s Why Verizon Wants to Buy Yahoo So Badly. Retrieved
from
http://fortune.com/2016/04/19/verizon-yahoo/