Google Gives a Cool Billion for AOL Stake
- By Stuart J. Johnston
- December 21, 2005
Get ready for more colorful graphics on Google pages. That may be one of the
most visible outcomes of a deal between the king of search engines and America
AOL announced Tuesday that it has thrown its lot in with Google, which is investing
$1 billion for a 5 percent interest in the venerable ISP and content provider,
apparently putting yet another roadblock in the way of Microsoft’s aggressive
plans in the entire search engine arena.
The move makes Google the only shareholder in AOL other than Time Warner. “Time
Warner will retain management control and full strategic flexibility over AOL,
while Google will have certain customary minority shareholder rights, including
those associated with any future sale or public offering of AOL,” said
a statement released by the Dulles, Va.-based AOL.
So what does a billion dollars buy these days? Under the terms of the deal,
Google will continue to provide search technology to AOL for one thing, thus
freezing Microsoft out of that channel.
On a more detailed level, however, it also involves the two companies in creating
an AOL Marketplace by “white labeling” Google's advertising technology,
thus letting AOL sell search advertising directly to advertisers on AOL-owned
properties, AOL’s statement said.
Also part of the agreement: expanding the use of display advertising throughout
Google’s properties and making AOL content more easily accessible to Google’s
Web crawlers. Furthermore, the two companies will collaborate on video search
and on letting Google Talk and AIM instant messaging users communicate with
“[This] agreement leverages technologies from both companies to connect
Google users worldwide to a wealth of new content,” Eric Schmidt, CEO
of Mountain View, Calif.-based Google, said in a statement. AOL’s branded
products include the AOL service and Web site, as well as AIM, MapQuest, Moviefone,
Netscape, CompuServe and ICQ services.
“The AOL-Google deal shows that Microsoft faces plenty of competition
and long-term dominance is by no means assured,” commented Jupiter Research
senior analyst Joe Wilcox on his blog. “No doubt, the AOL-Google deal
is a blow to Microsoft. A Microsoft deal could have snatched AOL from Google
as the default engine.”
Stuart J. Johnston has covered technology, especially Microsoft, since February 1988 for InfoWorld, Computerworld, Information Week, and PC World, as well as for Enterprise Developer, XML & Web Services, and .NET magazines.