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December 20, 2005

AOL and Google confirm deal

Posted by David Hunter at 8:05 PM ET.

The deal is done, pretty much as rumored.

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.”

There’s more in the article and in the full press release. Eric Auchard at Reuters has some analysis.


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.

Update – 10:20 PM: As for concerns from current advertisers and publishers about special treatment for AOL ([1], [2], [3]), AP Business Writer Michael Liedtke queried Google CEO Eric Schmidt:

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.

Filed under AOL, Coopetition, Google, MSN, MSN Search, Windows Live

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3 Responses to “AOL and Google confirm deal”

  1. Microsoft News Tracker » AOL and Google IM Interop Plan Says:

    [...] Yesterday’s confirmation of the rumored deal between Google and AOL brought one surprise – Google and AOL plan to make their instant messaging offerings – Google Talk and AOL Instant Messenger (AIM) – interoperate provided “certain conditions are met. Ben Charny at eWeek explains: Integrating Google Talk and AIM will be done in a roundabout way, mostly to keep AOL and Google from exposing the valuable profile information customers must first provide to sign up. [...]

  2. New plot twists in Microsoft-Yahoo soap opera | Microsoft News Tracker Says:

    [...] You may recall that Google owns 5% of AOL and handles their search ad business so Yahoo acquiring AOL and running Google ads would create a surprisingly homogeneous “content” and search company although not obviously a wildly profitable one. [...]

  3. Yahoo and Microsoft to fight over AOL acquisition? | Microsoft News Tracker Says:

    [...] last time the Yahoo part of this particular rumor cropped up, I observed that You may recall that Google owns 5% of AOL and handles their search ad business so Yahoo acquiring AOL and running Google ads would create a [...]

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