WSJ: AOL Nears Deal With Google

The Wall Street Journal is reporting that Time Warner (TWX) is close to a deal with Google (GOOG) for AOL. Microsoft (MSFT) has apparently been shut out.

The deal won’t likely be finalized until next week after Time Warner’s board meeting on Wednesday.
A person close to the situation says the deal being negotiated would allow AOL to sell advertising among the search results provided by Google on its Web properties. Google is also likely to promote AOL’s Web properties among the sponsored links in its search results.
Microsoft had hoped to convince AOL to use MSN’s search engine instead of Google’s. Time Warner had been in talks with Microsoft throughout the year, but in September began talking to Google as well.
A Google spokeswoman declined to comment. Time Warner spokesman declined to comment. A Microsoft spokeswoman couldn’t immediately be reached.
The contest illustrates how far companies are willing to go to secure a chunk of the quickly expanding market for Internet advertising, by far the fastest-growing advertising medium; online sales in the third quarter rose 34% to $3.1 billion from a year earlier, according to PricewaterhouseCoopers LLP. Search ads, which display ads based on queries users enter into search engines, are the biggest segment of that market.
The deal also comes at a difficult time for Time Warner, as hedge-fund investor Carl Icahn wages a dissident campaign to replace a majority of the media giant’s directors.
Microsoft has also struggled for a firm foothold in the online ad landscape, where its MSN unit, whose search ads are currently sold by Yahoo, has lagged behind Google in market share and in its ability to woo large Internet advertisers.

Posted by on December 16th, 2005 at 12:57 pm


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