Guess who's the latest competitor to Google ( GOOG) and Facebook ( FB)? Verizon ( VZ).
At first glance, the New York-based telecommunications firm may seem like an unlikely competitor to the Silicon Valley behemoths. But now as Verizon plans to absorb AOL ( AOL), the company becomes their rival, product of a fast-changing business environment driven by technology.
In an analyst note written after the Verizon announced its planned acquisition, MacQuarie Capital's Kevin Smithen wrote that Google and Verizon are on collision course "as Google tests the waters on wireless thru an MVNO with Sprint (S) and T-Mobile (TMUS) and VZ tries to create a business model in mobile video delivery." (MVNO refers to mobile virtual network operator.)
In its filing with the Securities and Exchange Commission, the company highlighted the value of AOL's ad tech network for its Internet of Things strategy. By controlling a technology stack of carrier, content and ads, the company could emerge as a serious competitor to technology companies.
The telecom industry is already under siege from tech startups and companies.
Google has substantial presence in the over-the-top space (services offered over the Internet), thanks to Google Voice. It is also making substantial investments to bring broadband and Wi-Fi access, areas of Verizon's operations, to consumers.
Smithen pointed to Google's partnership with Sprint and T-Mobile as emerging competition for Verizon, writing, "We feel that VZ is showing signs of desperation as its core wireless business comes under pressure and it scrambles to find new growth drivers."