Verizon’s troubles with AOL taught it a lesson: Consumers care about privacy

Tim Armstrong, a top Verizon executive, may be on the way out after struggling to turn the telecommunication company into a competitor to Google and Facebook, the Internet's preeminent digital advertising titans. Armstrong, the former AOL chief executive who joined Verizon when it purchased his company in 2015, is currently in charge of Oath, the Verizon subsidiary that contains AOL and Yahoo. Underscoring the story is the revelation that Verizon's digital advertising efforts have largely stalled.

Driving that underperformance is Oath's decision to behave differently from Google in its treatment of customer data. Instead of mining user information at every opportunity, Verizon asked its wireless customers to volunteer their Web browsing history and location information in exchange for certain freebies such as Uber rides and concert tickets. The behavioral data is regarded as extremely lucrative, because it gives Verizon the ability to target advertising more accurately and to charge marketers more. Given the choice, most of Verizon's 116.5 million wireless subscribers decided not to take the deal. Just 10 million of them have opted into the data-sharing program, known as Verizon Selects. By voting with their feet, consumers have spoken, said Jeffrey Chester, executive director of the Center for Digital Democracy, an electronic rights organization. "There’s been a global wake-up call — partly because of Cambridge Analytica and Facebook — about the loss of privacy for Americans — and so people are increasingly suspicious,” said Chester.