Google (GOOG:Nasdaq) and Time Warner’s (TWX:NYSE) America Online unit confirmed late Tuesday that they have expanded their current partnership into an agreement that gives Google a 5% stake in AOL for $1 billion.
Under the strategic alliance, Google and AOL will continue providing search technology to AOL’s network of Internet properties worldwide. Plans include: creating an AOL Marketplace through white labeling of Google’s advertising technology, expanding display advertising throughout Google’s network, making AOL content more accessible to Google Web crawlers and a video-search collaboration.
And here’s a surprise:
The companies also will enable Google Talk and AIM instant messaging users to communicate with each other, they said, “provided certain conditions are met.”
Kevin J. Delaney at the Wall Street Journal profiles Google’s Omid Kordestani who gets alrge part of the credit for the first AOL deal in 2002 as well as this one.
Saul Hansell’s New York Times article, AOL’s Choice of Google Leaves Microsoft as the Outsider has details of the Microsoft side of the AOL negotiation.
That arrangement already is raising questions whether Google will rig its algorithms so that AOL ranks higher in its search results — a prized position that Google has repeatedly said can’t be bought.
In Tuesday’s interview, Schmidt brusquely dismissed that notion. He said Google just wants to ensure some AOL material that’s difficult to index, such as video, finds its way into the search results.
“We are not giving (AOL) preferential treatment, nor did they ask for it,” Schmidt said. “I am making this clear: we will not let a business deal interfere with our search engine results.”
He didn’t mention ad positioning, however. Time will tell as the deal rolls out.