By John Kell and Alan Murray
May 13, 2015

The Verizon/AOL merger is really about big data.


Just minutes after pressing the button to send yesterday’s CEO Daily, we learned about the planned merger between Verizon and AOL. The media world lit up over the prospect of Verizon owning the Huffington Post. But Fortune’s Erin Griffith quickly pointed out this deal is not about media content – it’s about mobile advertising. (Mathew Ingram even speculates HuffPo may be sold.)


And this is where the merger gets interesting. AOL CEO Tim Armstrong, a consummate salesman, has been promoting his company’s ability to serve targeted ads to select audiences with great vigor. (He sketched it out on a Fortune white board last month.) Verizon has data that could make that targeting far, far more powerful. If you own a Verizon mobile phone, the company follows you all day long. You visit Starbucks regularly? The new Verizon could give you a coupon for a competing coffee shop. Hanging out at the mall? It could serve you a J. Crew ad for a nearby store. The company will have to find ways to ease privacy concerns, as this sort of targeting can feel creepy. But the combination makes Verizon a potential rival for Facebook, which currently dominates mobile advertising.


We suspect this is what Verizon was referring to in a jargon-filled press release that said the merger “will also support and connect to Verizon’s IoT (Internet of Things) platforms.” We don’t yet have a good vocabulary to describe this new, data-saturated business world… but it is happening fast.


Enjoy your day. And don’t hold your breath waiting for Congress to pass the trade bill.


Alan Murray

Top News

Senate Dems go against Obama trade push

President Obama’s trade agenda suffered a setback at the hands of his own party, with Senate Democrats uniting to deny him negotiating authority to hammer out pacts with foreign governments. The pressure now appears to fall back on the White House to find a way to get Senate Democrats back in line and salvage a priority that Obama views as key to his economic legacy.

• Talk of pay spreads to Facebook’s walls

The push to increase pay for America’s lowest paid workers often invokes images of Wal-Mart sales associates and employees behind the McDonald’s counter. Tech giant Facebook is also wrestling with pay, pushing vendors to improve benefits for their workers, including wages of at least $15 an hour. Facebook said it expects to bear the cost of the new standards as vendors increase their rates. 
WSJ (subscription required)

Wal-Mart criticized over bottled water

Critics are piling onto Wal-Mart to lament the retailer’s decision to continue sourcing some of its bottled water from a supplier that taps a California city hard hit by the state’s four-year drought. Compounding the bad public relations issue is the fact that Starbucks has already announced it would stop sourcing its Ethos bottled water in California. That decision came after a magazine report showed the coffee giant sourced water in areas that the federal government had designated as being in an “exceptional drought.” 

Verizon-AOL deal: Sign of overheating economy?

Mergers and acquisitions activity tends to peak in the year or two before the economy contracts. Given that 2015 deal volume is on pace to surpass 2014 figures by about 11%, one might get worried that M&A levels are reaching a danger zone, signaling a coming stock market bubble and possible recession. Those questions surfaced on Monday following the news that Verizon agreed to pay $4.4 billion for AOL, paying “through the nose” for the tech company, according to Fortune. Time will tell if this deal was perhaps the canary in the coal mine. 

Retailers hope for spring rebound

There hasn’t been much action at the retail cash register lately. April retail sales reported on Wednesday are only expected to rise modestly, following several months of weakness. Low temperatures were to blame for the first quarter weakness, but it doesn’t look like consumer spending has increased much as temperatures have warmed up. Oil prices have rebounded sharply, hurting savings at the gas pump. 
USA Today

Around the Water Cooler

• Americans want overtime pay

Americans have a reputation for working more hours in any given week than their European counterparts. And they would like to be compensated. A poll released by Public Policy Polling found 80% of respondents said that people making more than $23,000 annually should be allowed to receive overtime pay if they work more than 40 hours per week. The Department of Labor is currently rewriting overtime rules after being instructed to do so by President Obama last year. Will the government’s policy match American preferences? 

• Health insurance may nudge some gays to wed

Amid a push that has made same-sex marriage legal across a majority of U.S. states, some employers are telling gay workers they must wed in order to maintain health-care coverage for their partners. Over the past decade, companies began to increasingly offer coverage for gay employees and their partners as a way to provide equal benefits for couples that couldn’t wed. But now, some employers say it is only fair to require those couples to marry where legal, just as their straight co-workers must do to extend coverage. 
WSJ (subscription required)

• North Dakota also famous for caviar

North Dakota is famed for its role in the U.S. oil boom, but the state has also carved out a role as a producer of caviar. The state’s caviar czars say that the quality of their caviar is so close to Russia’s, they feel they are second in the market. Most of North Dakota’s caviar is sold wholesale, with only about 50 pounds sold retail at around $100 for a four-ounce jar. Russian caviar can cost twice as much retail. 

The woman who built India’s stock exchange

Chitra Ramkrishna heads the National Stock Exchange of India, one of just three women across the world that steers a stock exchange. With decades of work at the exchange, she helped build the NSE to the world’s third-largest bourse by number of trades. Ramkrishna’s next great challenge: finding a way to encourage Indians to invest. Just 1.5% of Indian households own equities, far less than investment penetration in China and the U.S. 

Fortune's 5 things to know today

Eurozone GDP and DuPont shareholder vote — 5 things to know today. Today’s story can be found here.


You May Like