Microsoft News Tracker

In today’s New York Times, Saul Hansell and Richard Siklos have the behind-the-scenes story of the impending Google AOL deal revealed yesterday. It’s got Time Warner executives shuttling between separate conference rooms at TW HQ where the Microsoft and Google teams are ensconced and TW CEO Richard Parsons leaving a Christmas party at 9PM Thursday night to shake hands with Google CEO Eric Schmidt to seal the agreement. Parsons then called Microsoft CEO Steve Ballmer Friday morning to deliver the bad news. It looks like the deal is done and merely awaiting approval by the TW board on Tuesday.

When all the dust settles, there will be the inevitable post mortems on whether Google paid too much to keep their search contract with AOL. However, one facet of the rumored deal is of particular interest to Google’s traditional advertising community:

Google has agreed to give AOL ads special placement on its site, something it has not done before. Until now, Google prided itself on its auction system for ads, which treated small businesses on an equal footing with its largest customers.

By agreeing to change its business practices for this deal, Google fends off what could have been a significant challenge from a combination of AOL and Microsoft and cements its position as far and away the largest seller of search advertising.

Maybe, but the resulting cost in cachet may be more than the cost in cash. More:

Google has been providing Web search and search ads for AOL since 2002. In the new arrangement, Google will offer promotion to AOL in ways it has never done for another company, two executives close to the negotiations said.

If a user searches on Google for a topic for which AOL has content - like information about Madonna - there will be a special section on the bottom right corner of the search results page with links to AOL.com. Technically, AOL will pay for those links, which will be identified as advertising, but Google will give AOL credits to pay for them as part of the deal. They will also carry AOL’s logo, the first time Google has agreed to place graphic ads on its search result pages.

Google will also provide technical assistance so AOL can create Web pages that will appear more prominently in the search results list. But this assistance will not change computer formulas that determine the order in which pages are listed in Google’s search results.

Google will also make a special effort to incorporate AOL video programming in its expanding video search section and it will feature links to AOL videos on the video search home page. These links will not be marked as advertising.

An executive involved in the talks said Time Warner asked Microsoft to give AOL similar preferred placement in advertising and in its Web index and that Microsoft refused, calling the request unethical.

And that’s the crux of the matter. Some early reactions:

John Batelle (also quoted in the article):

If this is true, AOL will once again be the ramp over which a major company jumps the shark.

Matt Asay at InfoWorld - Google sells its soul for a mess of pottage:

The lesson? Never, ever trust a capitalist who pretends to be otherwise. “Do no evil” was a catchy slogan for Google, but one that it was willing to sell for a few bucks.

BlogSEO:

I remember Google saying that you can’t buy high rankings, well it looks to me like that is not the case anymore.

The next episode of this saga will be when the final terms are made public, but Microsoft may well have dodged a bullet.

Adding to the prior buzz about the impending Windows Vista Community Technical Preview, Mary Jo Foley has more details at Microsoft Watch:

Windows testers will get a new beta version of Windows Vista, dubbed the December Community Technology Preview beta build, just before next week’s holidays, according to tester scuttlebutt.

New to the December release, testers say, will be a number of features and user-interface tweaks. A new defrag module; tight integration of Windows Defender (the product formerly known as Windows Antispyware); and a functional parental-controls filter are all rumored to be in the December Vista build.

There are rumors of Tablet PC functionality as well. As for dates?

OEMs and independent software vendor (ISV) partners are expected to get the December CTP any day now. And Microsoft Developer Network (MSDN) and other Vista testers will be able to get their hands on the build by Monday or Tuesday, if Microsoft sticks to its plans, the testers claim.
…
Microsoft officials, for their part, are continuing to hedge on providing a tentative release date for the next full-fledged beta release.

“We are targeting for most features to be code-complete by end of December and integrated into the product by early next year, so customers will have a feature-complete version of the product to test sooner than any previous Windows releases,” said a Microsoft Vista spokeswoman, when asked for Beta 2 timing clarification.

Much more by following the link.