Yahoo Acquires Video-Chat Start Up: Is it Enough to Compete With Google?

Shares of Yahoo! Inc. (NASDAQ:YHOO) closed up 2 percent on Tuesday after news broke that the company acquired ONtheAIR, a 5-man web start up with an innovative video-chat product.

What is OntheAIR and Why is it Good for Yahoo?

ONtheAIR was launched about 9 months ago with $880,000 in seed funding spearheaded by Scott Banister and True Ventures. The team of ex-Google (NASDAQ:GOOG) and Apple (NASDAQ:AAPL) software engineers set to work building a video-chat product designed to compete in crowded space, and has clearly gained some attention.

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The distinguishing feature about ONtheAIR’s product is described on the company’s CrunchBase page: “ONtheAIR allows anyone who is watching a live stream to video chat with the host in front of the audience. OnTheAir’s streaming video platform powers radio call-in shows for the digital age.”

It continues, “Viewers can text chat with each other and the host, or click a ‘Call In’ button to alert the host that they want to join them ‘on stage.’”

The group will join Adam Cahan and the mobile team at Yahoo and try to build out a product that can compete with Google+ Hangouts and Apple’s FaceTime…