In a move that could significantly bolster the fortunes of its struggling America Online unit, media titan Time Warner is holding talks with Microsoft about the software giant taking a significant stake in AOL.

The move comes as media companies look to strengthen their Web assets in the face of increased interest from all sectors in the Internet. It also comes as search-engine company Google begins to venture beyond Web search into areas that were once the domain of companies such as AOL and Microsoft, including instant messaging and e-mail-and as Google starts to capture a larger piece of the online advertising pie, often at the expense of online services such as AOL and Microsoft’s MSN service.

The talks, which neither company would comment on, are at a preliminary stage but have centered on AOL switching its searching duties to MSN’s product as well as to other areas.

If the talks turn into something real, it could be a huge boost to AOL, which is losing subscribers as more consumers drop AOL’s core dial-up service for broadband features from cable and telephone companies. Merrill Lynch media analyst Jessica Reif Cohen pointed out the combination could vault a combined MSN-AOL to the head of the pack in terms of Web traffic and finally address AOL’s lack of a proprietary search function.