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Google Beats Out Microsoft for Lucrative AOL Business

December 17th 2005

Google Beats Out Microsoft for Lucrative AOL Business

AOL deal

AOL will stick with the worlds most popular search engine.  MSN had hoped to beat Google to the punch for the lucrative 20 million AOL users.  In the end Google will pay $1 billion for a 5% stake in AOL and AOL will continue to use Google’s search.

This is important for Google because they are able to keep the AOL audience and the revenue associated with their search advertising.  According to the Times Online, AOL is their biggest single source of advertising revenue.  In fact, AOL provided 10% of Google’s ad revenue for the first nine months of this year.  This equaled about $420 million. 

Microsoft was hoping to grab the AOL prize, now that it has launched a competing search engine.  According to those familiar with the Time Warner Company, the deal with Google was a safer option as compared to dealing with the relatively untested MSN technology.

 

According to the Seattle Post Intelligencer the talks between Google and AOL, and Microsoft and AOL executives, “reached a fevered pitch Thursday night”.  The two parties were in separate conference rooms in the Time Warner Center in New York City and the AOL executives walked back and forth between the two rooms. 

At 9PM Richard D. Parsons, the chief executive for Time Warner told Eric E. Schmidt, Google’s chief executive that they would be accepting Google’s better offer.  This was a major blow to Microsoft as they had eagerly sought this relationship with AOL.

This deal could open up the AOL Time Warner film and television library to Google.  It is apparent that Google is looking beyond their initial search business, and this move makes them more competitive with Yahoo. 

The official announcement will likely come tomorrow but Google’s share price has already moved above $430 per share.  Google opened itself up to public financing 18 months ago at a mere $85 per share.

 
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By Dan Wilson
Best Syndication Staff Writer

 

Keywords and misspellings:  aoltimewarner warmer serch engine gooogle


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Copyright 2005 Best Syndication                                     Last Updated Saturday, July 10, 2010 09:39 PM