Gateways to the Internet: AOL & Yahoo!

By Haim Mendelson, Philip Meza
2000 | Case No. EC24
This case traces AOL’s evolution from Internet Service Provider (ISP) to media empire. In 2000, AOL controlled a wide variety of Internet and media assets including vast content arms (e.g. Time Magazine), broadcasters (e.g. CNN) and cable systems. In assembling these businesses, AOL made a bet that it would be important to control distribution and content. Yahoo!, on the other hand, placed its bet on an agnostic platform and an advertising-based business model where advertisers paid for the privilege of exposure to Yahoo!’s vast audience. Although heavily dependent on advertising revenue in 2000, Yahoo! was broadening its revenue base and had introduced other revenue generating business services and e-commerce. The two models attempt to leverage each company’s unique position as a gateway to the Internet and invites the reader to speculate about which vision for the structure of an Internet media company will triumph.
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