Google Beats Out
Microsoft for Lucrative AOL Business
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
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.
Best Syndication Staff Writer
Keywords and misspellings: aoltimewarner warmer
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