Google Appears Favored in AOL Race

Dec 16, 2005  •  Post A Comment

Time Warner’s America Online unit appeared to be close Friday to strengthening its relationship with search-engine powerhouse Google, with a deal possibly emerging as soon as next week.

According to a report Friday on The Wall Street Journal Web site, a pact between AOL and Google could come shortly after a Time Warner board meeting scheduled for Wednesday.

The report said that the deal being hammered out would involve Google paying $1 billion for a 5 percent stake in AOL. An agreement would also enable AOL to sell ads among the search results that Google will provide to AOL’s various Web sites, while Google would promote AOL-owned Web sites among the sponsored links that appear with Google search results.

The latest news represents a major shift in the ongoing battle for AOL. Earlier this month software giant Microsoft was seen as the leading contender to strike a deal with AOL, whose fortunes have risen in recent months as the online service has torn down barriers to its content and allowed nonmembers access and as online advertising continues its steep growth trajectory.

Microsoft, which has a search engine of its own, was keen on supplanting Google as AOL’s main search provider and approached AOL earlier this year about striking a deal. That triggered other suitors to jump into the fray, including Yahoo, which later dropped out after Time Warner officials refused to discuss selling a significant stake in AOL.