Hello and welcome back to the Deep Dive. It is
Saturday, February 14th, 2026. Happy Valentine's
Day to you. And happy Valentine's Day to you
as well. It feels like a strange day to be recording,
doesn't it? All this pressure to talk about romance
and connection. Which is exactly why I think
our topic today is perfect in a really twisted
way. Oh, how so? Because we're talking about
a relationship that almost everyone of a certain
age has had. It was a relationship that... You
know, it started out exciting and new. OK. Then
it got a little bit controlling. Then it became
incredibly frustrating. And eventually it ended
with us trying to break up while they just begged
us to stay. And yet for some people, that relationship
lasted for, what, over 30 years? We are, of course,
talking about America Online. AOL. The three
letters that basically were the internet for
an entire generation. And I know what you're
thinking. Why are we talking about AOL in 2026?
Isn't that just a dinosaur? You would absolutely
think so. But this particular dinosaur has been
making a lot of noise recently. It really has.
Just a few months ago, in October of 2025, AOL
was acquired yet again. This time by an Italian
tech conglomerate called Bending Spoons for roughly
$1 .5 billion. $1 .5 billion. That's a staggering
amount of money for a brand most people associate
with. Well, with the screech of a 56K modem.
Exactly. And speaking of that screech, we also
have to pour one out for a specific era because
as of September 30, 2025, so just late last year,
AOL officially, finally. discontinued its dial
-up service. It is officially the end of the
line. No more handshakes, no more static, no
more connecting at 2400 baud. It's over. So here's
our mission today. We have a massive stack of
source material, corporate history, merger documents,
the controversy falls, all of it. We're going
to unpack how a company that started, and this
blew my mind, as a video game service for the
Atari 2600. Yeah, that part's wild. Became the
internet on training wheels for millions, executed
the most disastrous merger in American history,
and then somehow survived as this like zombie
media company for another two decades. It is
a wild, wild ride. And I think the reason this
deep dive is so important right now is that we
tend to remember AOL as a joke, you know? Totally.
We remember the funny CDs and the you've got
male voice. But if you actually look at the DNA
of this company. It is the blueprint for everything
we use today. What do you mean? It was the walled
garden before the Apple App Store. It was social
media before Facebook. It was, frankly, surveillance
capitalism before Google even had an algorithm.
Okay, let's unpack that because you just dropped
a bomb there that I think a lot of people, myself
included, kind of gloss over. You said it started
as a video game service. That's right. If you
think the origin of AOL is Steve Case in a garage
somewhere wanting to send an email, you are completely
wrong. Right. The origin story takes us all the
way back to 1983. And we're talking about a company
called Control Video Corporation or CVC. 1983.
I mean, that's. The Macintosh computer hasn't
even launched yet. The Internet as we know it
is basically just a military and academic project.
Exactly. And the man behind this wasn't Steve
Case. It was a guy named William Von Meister.
And he was, well, he was a character, a sort
of eccentric entrepreneur who had previously
tried to launch a service to deliver music via
cable TV. So like Spotify before Spotify. Basically,
yeah. But the music industry killed it. So he
pivoted. He pivoted to video games. And the product
was called GameLine. GameLine. And honestly,
the technology for its time is f***ed. fascinating
you have to picture this you have an atari 2600
console at home you buy this massive chunky modem
cartridge from cvc for about 50 bucks the modem
cartridge yeah you plug it into your atari and
then you plug a phone line directly into the
cartridge wait hold on you're telling me that
in 1983 people were downloading games over a
phone line how did that even work physically
The Atari didn't have a hard drive. It had no
storage. That's the genius of it. The cartridge
itself had a specialized chips and RAM that could
hold the game data temporarily. You'd dial up,
you'd pay a dollar, literally one dollar per
play, and the code for the game would be pushed
down the phone line into that cartridge's memory.
You could play for as long as you wanted. As
long as you didn't turn it off. Provided you
did not turn off the console. The second you
did, poof, the game was gone. So it was basically
a rental, more like having an arcade cabinet
in your living room that only played one game
at a time. Precisely. And it even tracked high
scores. If you were really good, your score got
sent back to their central server, and you could
see where you ranked regionally. It was online
gaming a decade before Doom. That sounds absolutely
incredible. So why? Why did it fail? Why don't
we all have game line modules in our attics?
Terrible, terrible timing. CVC launched GameLine
right into the teeth of the great video game
crash of 1983. Oh, right. the et disaster yeah
the market was just flooded with awful games
consumers stopped buying consoles retailers were
panicked and the whole industry just imploded
cdc was dragged right down with it they were
near bankruptcy and this is where the cast of
characters we actually know starts to assemble
yes this is where steve case comes in he was
brought in as a marketing consultant he was young
he'd worked at pizza hut essentially inventing
toppings like really yeah that was his claim
to fame he was looking for the next big thing.
And they also brought in a guy named Jim Kimsey
as a manufacturing consultant. So you've got
the boring operations guy and the visionary marketing
guy. It's the classic startup duo. And when CVC
collapsed, von Meister left in early 1985. But
Kimsey and Case, they look at the core technology,
this ability to connect a home device to a central
server. And they said, there is something here.
It's just it's not for Atari games. So they pivot.
They pivoted hard. to computers they founded
a new company called quantum computer services
in may 1985 and this is really important they
didn't try to build a service for every computer
out there they struck a deal with commodore for
the commodore 64. the single best -selling computer
model of all time an enormous built -in audience
and quantum launched a service called q -link
specifically for the commodore 64 and 128. and
because they were building for just one specific
machine They could do something the other online
services couldn't. Exactly. Which was graphics,
graphics. See, back then, if you used a service
like CompuServe or the source, you were connecting
to a mainframe. Your computer at home was just
a dumb terminal. All you saw was text. Green
text on a black screen. Right. Like in the movie
War Games. Very intimidating. Terrifying for
a normal person. Qlink used the processing power
of the Commodore itself. It had a graphical user
interface. You used a joystick or a mouse. You
clicked on little icons. It used this proprietary
protocol to send tokens back and forth instead
of just raw text. It felt like using software
and not like hacking into the Pentagon. So from
day one, their whole DNA was user experience.
They weren't trying to be the most powerful or
have the most features. They were trying to be
the friendliest. 100%. Steve Case's vision was
explicitly to be the online service for people.
who don't know how to use computers. He wanted
to make it an appliance, like a toaster. You
plug it in and it just works. Which brings us
to 1989. They rebrand quantum computer services
to something a little more patriotic. A little
more mainstream. America Online. And that name
change really signaled a shift in their strategy.
They weren't just for Commodore nerds anymore.
They were going after the mass market. They wanted
everyone. And to get everyone. Yeah. you have
to invent a whole new way of marketing. Oh, yes.
I know exactly where this is going. We have to
talk about the carpet bombing. The carpet bombing
is the only way to describe it. If you were alive
in the 90s, you could not escape them. You opened
a magazine. AOL disc. You bought a box of cereal.
There was an AOL disc in the bag. You went to
the movie theater. They handed you an AOL disc
with your popcorn. It was inescapable. Their
chief marketing officer at the time, Jan Brandt,
had this philosophy that the software should
be a non -issue. She didn't want you to have
to go to a store and make a conscious decision
to buy AOL. She wanted to remove every single
bit of friction. If you even thought about going
online, oh look, there's a disc on your coffee
table. There's another one in your mailbox. The
stats on this are just bananas. I was reading
in the source material that at one point, something
like 50 % Half of all CDs produced worldwide
had an AOL logo on them. Stop and think about
the scale of that. Not 50 percent of software
CDs, 50 percent of all CDs. That includes music
albums, everything. Half of the global production
capacity for compact discs was occupied by Steve
Case's marketing department. But was it worth
it? I mean, that has to be insanely expensive.
They were basically printing money, just throwing
it out of helicopters. It was incredibly expensive.
But the economics work. This is the classic customer
acquisition cost or CAC versus lifetime value
or LTV. OK, break that down. Let's say. cost
them a dollar to produce and mail a disk. If
they send out 100 disks, that's $100 spent. If
only one single person signs up from that batch,
their acquisition cost for that customer is $100.
Which sounds ridiculously high. It sounds high
until you realize that user is paying, say, $20
a month. In just five months, they've paid back
the acquisition cost. And people stayed on AOL
for years. The lifetime value of a single subscriber
was thousands of dollars. So spending $100 or
even $300 to get a customer was a complete no
-brainer. It was just a numbers game. A volume
business. A ruthless numbers game. And it did
create this massive environmental backlash. There
was a campaign called No More AOL CDs, where
IT workers collected over 400 ,000 of these discs.
I remember that. They built a literal throne
out of them. They did. They were trying to shame
the company for all the plastic waste. But you
know what? The strategy worked. It absolutely
worked. By the mid -90s, they had just crushed
the competition. CompuServe, Prodigy. Jeannie,
they were all left in the dust. Completely. They
hit 3 million users by 1995. And once those users
were in, they were inside the walled garden.
I love that term. Can you explain the walled
garden concept for our younger listeners? Because
the Internet today feels so, so permeable. You
just jump from Google to Reddit to Wikipedia
without even thinking. Right. So the walled garden
meant that AOL curated everything for you. When
you logged into AOL in, say, 1994, you weren't
really on the World Wide Web. Not at first. You
were on AOL's private Internet. Exactly. They're
intranet. They had licensed content. They had
the New York Times on AOL. They had the Encyclopedia
Britannica on AOL. They had games, weather, sports,
chat rooms. It's like an all -inclusive resort.
Yeah. You check in and you don't really need
to leave the property because the buffet is there,
the pool is there, the entertainment is all right
there. It's the perfect analogy. And for a non
-technical user, the open internet outside those
walls was a scary, confusing wilderness. You
had to know about HTTP protocols. You had to
type in IP. addresses sometimes. It was messy.
AOL made it safe. It was Disney World. But the
people who already lived in the wilderness, the
hardcore techies, the university students, they
didn't much like the Disney World tourists, did
they? They hated them. Oh, they despised them.
And this brings us to one of my favorite sociological
events in internet history, the Eternal September.
The Eternal September. It sounds like a horror
movie title. For the old school Internet users,
it kind of was. So here's the context. Before
1993, if you wanted to talk to people online,
you used something called Usenet. Which was kind
of like a prehistoric Reddit. A very good way
of putting it. It was a system of discussion
boards, very text -based and decentralized. And
the people on Usenet were mostly university students,
professors, and researchers, people who had access
to university mainframes. Right. And every year
in September, a new crop of college freshmen
would arrive, get their first university email
accounts, and flood Usenet. They would post annoying
questions. They wouldn't read the FAQs. They'd
break all the unspoken rules of etiquette. They
were the noobs? They were the noobs. But usually,
by October, or November, the freshmen would either
learn the rules or get bored and leave. So the
September chaos would end and order would be
restored for another year. Until 1993. Until
September 1993. That is the month that AOL built
a gateway that allowed its millions of users
to access Usenet for the first time. Suddenly,
the floodgates didn't just open, they were blown
off their hinges. It wasn't just a few thousand
freshmen anymore, it was millions of normal Americans.
Housewives, plumbers, teenagers, grandparents.
And they had no idea what the rules were. They
had no idea. They were typing in all caps. They
were asking, how do I download pictures in, like...
advanced philosophy discussion groups, it was
total chaos. And because AOL kept sending out
those CDs, the flood of new people never stopped.
It didn't end in October. It was September. Forever.
Hence the eternal September. That's incredible.
And I read about the hidden news group they created.
That's hilarious. Yes. The Usenet veterans created
a news group called alt .aolsucks. And the funniest
part is that AOL actually listed it in their
own directory. They did not. They did. But they
changed the description. On Usenet, the official
description was a gathering place for those who
despise the great Satan of the Internet. But
inside AOL, the description was just flames and
complaints about America online. You have to
give him credit for allowing it at all. But all
this growth wasn't just causing cultural problems.
It was about to cause a massive, massive infrastructure
meltdown. We have to talk about the pricing shift
of 1996. This was the moment that nearly killed
the company. This was their big gamble. Up until
late 1996, AOL charged by the hour Oh, I remember
that anxiety. Right. You'd pay a monthly fee,
which gave you, say, five hours. And then every
single minute after that cost money. The meter
was always running. You'd log on, check your
mail as fast as humanly possible, download everything,
and then immediately disconnect to read it offline.
Exactly. It kept network traffic manageable because
people were financially incentivized to log off.
But the competition was getting fierce. Smaller
local ISP started offering unlimited access for
a flat fee. AOL was losing customers. So Steve
Case had to respond. He had to. So in December
1996, he pulled the trigger. $19 .95 a month.
Unlimited use. And the dam broke. It was catastrophic.
Just a complete and utter disaster. Suddenly,
nobody logged off. Why would you? You weren't
paying by the minute anymore. People would log
on in the morning and just leave the connection
open all day long. And AOL's modems physically
could not handle it. Not even close. You have
to understand the math. They had built their
entire network infrastructure, assuming the average
user would be online for maybe 20 minutes a day.
Suddenly, the average user was online for three
hours a day. The busy signal. became the soundtrack
of America in 1997. I remember coming home from
school, trying to dial in, and just hearing that
beep, beep, beep over and over again. I'd set
it to redial for two hours just to check my email.
It became a national crisis. I am not exaggerating.
People were filing lawsuits. State attorneys
general were opening investigations for false
advertising. It got so bad, Steve Case had to
go on television and film a commercial that was
basically a hostage video. I remember that ad.
He looked so tired. He looked so stressed out.
He looked exhausted. He just looked straight
into the camera and said, we're working day and
night to fix this. They had to pause all that
marketing. They had to stop sending the CDs because
they literally couldn't handle the customers
they already had. But here's the amazing thing.
People stayed. Even with the constant busy signals,
even with all the frustration, they didn't leave.
Why? Community. The chat room. The chat rooms.
That was the killer app. People weren't on AOL
for the news articles. They were there to talk
to their friends or to talk to complete strangers
in town square or to find romance in the romance
connection. It was the first mass market social
network. It absolutely was. But managing all
those chat rooms. Yeah. That was a massive labor
undertaking. And this is where we get into some
really murky ethical waters that I think are
fascinating. Your community leader program. Right.
So AOL realized very quickly they couldn't possibly
hire enough ped staff. to moderate thousands
and thousands of chat rooms. It would cost a
fortune. So they tapped into their most passionate
users. They created the Community Leader or CL
program. And who are these people? They were
volunteers. They were power users who just loved
AOL. And the company said, hey, if you agree
to work for us, monitor these chat rooms, enforce
the terms of service, help out the newbies, we'll
give you a special badge and free AOL. Wait,
hold on. Their only compensation was... Saving
$20 a month. That was it. And we were talking
about serious work. These people had scheduled
shifts. They had to log their hours on time cards.
They had to work a minimum of four hours a week,
but many were working 20 or 30 hours. They signed
nondisclosure agreements. They were managed by
senior volunteers. It was a full -blown corporate
hierarchy staffed almost entirely by unpaid labor.
That sounds completely illegal. Well, a couple
of former volunteers thought so. In 1999, they
filed a massive class action lawsuit claiming
violations of the Fairlady Act. Labor Standards
Act. They argued, look, if it looks like a job
and it acts like a job and you're telling me
what I have to show up like a job, you have to
pay me minimum wage. How did that turn out for
them? It dragged on for over a decade. But eventually,
in 2010, AOL settled. They paid out $15 million.
It's a fascinating precursor to all the debates
we have now about, say, Reddit moderators or
Discord admins. AOL proved you could build a
billion -dollar empire on the backs of volunteers,
but eventually the bill comes due. So we have
the rise, the explosive growth, the community.
Now we have to talk about the absolute peak,
the Icarus moment where AOL flew way too close
to the sun, the merger. January 2001, the merger
with Time Warner. This wasn't just a business
deal. This felt like a cultural event. I remember
the magazine covers. The deal of the century.
It was the largest merger in United States history.
At the time it was announced, the combined value
was something like $360 billion. To put that
in perspective, that's bigger than the GDP of
many countries. So what was the logic? Because
looking back on it now, it seems completely insane
to mash up an internet provider with a movie
studio and a magazine publisher. The logic was
convergence. That was the big buzzword. The idea
was simple. AOL has the distribution. They have
the eyeballs, the tens of millions of subscribers.
Time Warner has the content Warner Bros. movies,
CNN, Time magazine, HBO. So pipes plus content
equals world domination. In theory. But there
was a darker, kind of shrewder financial reality
underneath all that. You have to look at the
stock market at the time. This was the absolute
peak of the dot -com bubble. Right. AOL's stock
was incredibly historically high. But Steve Case
and the other executives, they were smart. They
knew the bubble couldn't last forever. They knew
their stock was, well, let's call it monopoly
money. It was inflated by hype, not by actual
profits. Exactly. So they used their inflated,
hype -driven stock to buy a company with real,
tangible assets. Time Warner had cables in the
ground. They had film libraries. They had printing
presses. Real stuff. It was a... Brilliant move
by AOL to convert their paper wealth into real
wealth right before the crash. But then the crash
happened. Almost immediately. The deal closed
in January 2001. By late 2001, the dot -com bubble
had burst completely. The economy slowed down
after 9 -11. And the valuation of the combined
company just plummeted. It went from $360 billion
to like $120 billion. They lost over $200 billion
billion in value in the blink of an eye. And
that must have caused some serious, serious tension
inside the building. It was a civil war, an absolute
culture clash. You had the old school Time Warner
suits guys who did three martini lunches and
flew on corporate jets and cared about prestige.
And you had the AOL techies guys in T -shirts
and khakis who cared about growth at all costs.
And the Time Warner side must have felt like
they got scammed. Totally. They looked at the
AOL side and basically said, you conned us, you
bought our historic company with fake money,
and now you're dragging our stock price through
the mud. It got so bad that they eventually took
the name off the building, right? The ultimate
insult. That was the final humiliation. In 2003,
they dropped AOL from the parent company's name.
They went back to just being Time Warner. It
was like a divorce where one partner just burns
all the photos. But the problems weren't just
financial or cultural. The technological ground
was shifting right beneath their feet. And this
is the part that I think really killed AOL as
a utility. Broadband. This is the nail in the
coffin, 100%. Remember, AOL's entire business
model was being your ISP. You paid them to dial
in and get online. But then cable companies and
phone companies started offering DSL and cable
internet. Which was always on and so much faster.
And you didn't need a separate piece of software
to connect. Exactly. Once you had a cable modem
from Comcast, you were already on the internet.
You didn't need the AOL welcome screen. You didn't
need the dialer. So why would you pay $20 a month
for AOL when you're already paying $40? a month
for broadband. So AOL became redundant, an unnecessary
metal man. They became a website, just a website
that people were paying a subscription fee to
access purely out of habit. They faced this massive
existential crisis. If we aren't the connection
anymore, what are we? And they tried to pivot.
I remember this. They launched the bring your
own access plan. In 2006, they finally admitted
defeat. They basically said, OK, fine, we'll
give you the email and the software for free.
Just please, please keep visiting our website
so we can show you advertisements. They had to
switch from a subscription business to an advertising
business. And that leads us directly into the
zombie era, or maybe you'd call it the media
mogul era. Because after the Time Warner disaster,
they spun off and became an independent company
again in 2009. And they brought in a guy named
Tim Armstrong. Tim Armstrong is a key figure
in this later stage. He came from Google. He
understood the new Internet. He knew they couldn't
sell dial -up anymore, so his strategy was simple,
content and ad tech. Okay, let's talk about the
content first. They went on a shopping spree
that feels very, very confusing in hindsight.
It was the era of the content farm. Armstrong
believed that if AOL owned enough websites, they
could sell enough ads to survive. So they bought
TechCrunch, the biggest tech blog, in 2010. They
bought the Huffington Post in 2011 for $315 million.
Which is huge news at the time. Arianna Huffington
basically became the queen of AOL for a while
there. She did. They also had Engadget, Autoblog,
and MapQuest. Remember printing out directions
from MapQuest? Turn left in .4 miles. Yeah. Oh,
I live by MapQuest before smartphones. But the
most interesting and ambitious failure of that
era was a project called Patch. Oh, Patch. I
remember seeing a patch site for my specific
neighborhood. It was supposed to be hyper local
news. That was the dream. Tim Armstrong wanted
a dedicated news site for every single town in
America, thousands of them. He hired hundreds
of young journalists right out of school. But
the economics just didn't work. You can't make
enough money to pay a reporter's salary from
ads on a news site for a town of 10 ,000 people.
Exactly. It just hemorrhaged money for years.
But while the content side was struggling and
getting all the headlines, they were quietly
building something else in the basement, something
boring but very, very lucrative, ad tech. This
is the part that explains why the company actually
survived for so long. Tim Armstrong turned AOL
into a machine for something called programmatic
advertising. Okay, explain that for us. What
is programmatic? So in the old days, if Ford
wanted to buy an ad on the New York Times website,
a Ford sales guy would call a New York Times
sales guy and they'd sign a contract. Programmatic
is automated. It's software talking to software.
Ford says, I want to target males age 30, 40
who live in the Midwest and like trucks. And
the software automatically bids on ad slots across
millions of different websites. in milliseconds
to find those people. And AOL built the software
that made that happen? They bought a bunch of
smaller companies, Adapt TV, Millennial Media,
and they stitched them all together into this
big platform they called One by AOL. They became
the middleman. The plumbing. So even if you never
visited AOL .com, AOL's code was probably loading
the ads you saw on other sites. That is actually
genius. Yeah. They stopped trying to be the destination
and they just started being the plumbing for
the entire Internet. Exactly. But we can't tell
the story of this era without taking a pretty
significant detour into the dark side. Because
as AOL was struggling to keep customers, they
got, well, they got aggressive. Unbelievably
aggressive. We have to talk about the Vincent
Ferrari call. Oh, boy. If you were on the internet
in 2006, you heard this recording. It went viral
before viral was really a thing. So set the scene
for us. Yeah. June 2006. Vincent Ferrari is a
30 -year -old guy. He calls AOL to cancel his
account. It's actually his dad's account, but
he has all the info. And just in case, he decides
to record the call. And what happens is basically...
hostage negotiation. I have the transcript here.
I just want to read a small bit of it because
it is truly unbelievable. Ferrari says, I want
to cancel the account. The rep, whose name is
John, says, OK, well, I'm looking at your account
here and I'm seeing that you've been with us
for a long time. The standard opening. Right.
Ferrari says, I don't use it. I want to cancel.
The rep then says, but why? What is wrong with
the software? Ferrari. I don't need to explain
myself. I just want to cancel. And then the rep
says, well, I can't cancel the account until
you tell me what the problem is so we can fix
it. And this goes on for 20 minutes, 20 minutes
of him just saying cancel the account and the
rep refusing. At one point, the rep literally
says. I am not going to cancel the account until
you explain why. It was pure, unadulterated hostility.
Ferrari posted it on his blog and it just exploded.
It was on CNBC, The Today Show, everywhere. It
basically confirmed what everyone secretly suspected.
AOL was the Hotel California. You can check out
anytime you like, but you can never leave. And
it wasn't just a rogue employee. That's the really
scary part. Soon after that call went viral,
AOL's internal retention manual leaked. It showed
that employees were financially incentivized
to do this. They got bonuses for saving cancellations.
If they just said, OK, your account is canceled,
they took a hit on their paycheck. The entire
system was designed to harass you. They eventually
had to settle with the state of New York for
over a million dollars. But the damage to the
brand was just... It was done. It felt so desperate.
And then just two months later, in August of
2006, they had an even bigger and frankly more
terrifying scandal. The search data leak. This
one actually scares me way more than the cancellation
call. It should. It's much worse. AOL released
a massive data set for academic research. It
contained 20 million search queries from about
650 ,000 users over a three -month period. Now,
they thought they were being safe. They replaced
the screen names with random numbers. So instead
of Steve Case, it was user 4417749. But a person's
search history is like a fingerprint. It's incredibly
personal and unique. It is more than a fingerprint.
It's a diary. It's a confession. Think about
what you type into a search bar. You type medical
symptoms you're embarrassed about. You type addresses
to people's homes. You type your own name just
to see what comes up. And people immediately
started digging through the data. Of course.
And the New York Times found user 4417749, based
on her searches for landscapers in Lilburn, Georgia,
numb fingers, and dog that urinates on everything,
they tracked her down. It was a 62 -year -old
widow named... Thelma Arnold. They knocked on
her door, read her her own search history, and
she confirmed it was her. That is horrifying.
That shattered the entire illusion of anonymity
online. I think that was the moment we all collectively
realized, oh, they're watching everything. It
was the birth of modern privacy anxiety. AOL
apologized profusely. The CTO resigned, but the
cat was out of the bag. We are all Thelma Arnold
now. So despite all these PR nightmares, that
boring ad tech business we talked about. was
actually valuable. Valuable enough that in 2015,
a new giant entered the chat, Verizon. Verizon
bought AOL for $4 .4 billion in 2015. And let's
be crystal clear, they weren't buying the dial
-up business or the email account. No. Not at
all. They were buying the ad tech stack. Verizon's
logic was we own the pipes, the cellular network.
Now we need the technology to serve ads on those
pipes. They wanted to compete with Google and
Facebook. And then just to make things more confusing,
Verizon also bought Yahoo a couple of years later.
Yes. So suddenly under the Verizon umbrella,
you had the two fallen giants of the 90s web,
AOL and Yahoo. And they merged them into a new
division with the worst name imaginable. Oath.
Oath. Oh, God, I remember everyone making fun
of that name. It sounded like a cult. Or bad
perfume. It was terrible branding. But the strategy
was at least semi -valid. Combine AOL's ad tech
with Yahoo's massive user base, fantasy sports,
finance, mail. They wanted to create a third
pillar to stand against the Google and Facebook
duopoly. And did it work? No. It failed miserably.
The Google Facebook advertising machine was just
too strong. Verizon spent about $9 billion buying
AOL and Yahoo. And in 2021, they threw in the
towel. They sold 90 % of the division to a private
equity firm called Apollo Global Management.
For how much? $5 billion. So they bought high
for $9 billion and sold low for $5 billion. They
lost billions of dollars on the experiment. And
that brings us to the now, or at least the very
recent past. Apollo had it for a few years, stripped
it down for parts, and then sold it again. In
October 2025, Apollo sold AOL to Bending Spoons.
Bending Spoons. I love that name. It sounds like
a magic trick from the Matrix. Who are these
guys? What do they do? They are an Italian tech
firm based in Milan, and their business model
is fascinating and a little ruthless. They are
professional aggregators. They buy distressed
but beloved tech products. They bought Evernote,
they bought Meetup, and they optimize them. Optimize
sounds like a euphemism for fire everyone and
cut all the costs. It often is. They have this
proprietary tech platform where they migrate
the code. automate the backend, lay off most
of the staff, and focus on extracting profit
from the remaining loyal paying users. They're
kind of like a recycling plant for old apps.
And they paid $1 .5 billion for AOL, which implies
they think there was still a lot of profit to
be squeezed out of this stone. And there is.
The source material notes that as of 2025, AOL
still has 30 million active users. 30 million.
Who are these people? Are they bots? No, they're
real people, mostly older. They are people who
have had their at all dot com email address for
30 years. It is their digital identity. It's
on their business cards, their bank accounts,
their doctor's forms. Switching your primary
email address is a nightmare. So they just stay.
They log in to check mail. They read the news
on the home page. They are a captive, monetizable
audience. But the dial up that is truly officially
gone. Yes, the source confirms it. On September
30, 2025, AOL officially discontinued the dial
-up service for good. It's just incredible to
think that as recently as 2015, there were still
2 .1 million people paying for AOL dial -up.
Inertia is the most powerful force in all of
business. Some people just keep paying the bill
because they forgot about it or they think they
still need it for their email to work. But by
2021, it was down to just a few thousand and
now zero. The screeches have finally gone silent.
So as we look back on this entire journey, from
downloading Atari games over a phone line in
1983 to being acquired by an Italian optimization
firm in 2026, what's the synthesis here? How
should we remember AOL? You know, it is so easy
to mock AOL. It's easy to laugh at the you've
got mail guy and the carpet bombing CDs. But
I think we really need to give them their flowers.
AOL taught an entire generation of people how
to be online. It was the training wheels for
the internet. It was more than that. It normalized
the behaviors that we all do every single day
without thinking. Think about it. Instant messaging
aim. is the direct grandfather of WhatsApp, Slack,
and Discord. The profile you had on AOL Hometown,
that is the grandfather of your Facebook page.
The curated news feed, AOL invented that. And
the freemium model. giving away the software
for free to get you hooked on the monthly subscription.
Exactly. And for better or worse, the surveillance
model, tracking what you do online to sell targeted
ads. We often look at AOL as this big, clumsy
dinosaur that couldn't adapt and died. But if
you actually look at its DNA, it won. Its DNA
is everywhere. We are all still living in the
world Steve Case built. The graphics are just
better now. That is a haunting thought. We are
all still in the walled garden. The walls are
just invisible now. And the garden is a lot bigger.
We traded the blue AOL interface for the blue
Facebook interface, but the fundamental game
is exactly the same. Keep the user logged in,
keep them clicking, and sell their attention
to the highest bidder. Well, on that cheerful
note, we are going to wrap up this Valentine's
Deep Dive. If you still have an aol .com email
address, wear it like a badge of honor. You are
a pioneer. You are a survivor. And maybe, just
maybe, check your credit card statement and see
if you're still paying for it. That is very good
advice. Thanks for listening to the Deep Dive.
We will catch you on the next one.