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Monday, December 19, 2005

Google Likely to Beat MSN to AOL Deal

Posted by @ 8:16 pm

It is widely anticipated that Google and AOL will announce that they have reached a deal involving an equity stake in AOL, an advertising and content partnership and joint development work.

If rumors are to be believed, Google has beaten Microsoft to form a strategically important partnership with AOL and will pay $1 billion for a 5% equity stake in AOL. In addition, AOL will be able to sell advertising on Google sites and promote AOL content in Google’s search advertising, and Google and AOL will jointly work on the development of video search capabilities and share access to AOL’s video library.

This development is a significant setback for MSN, who was hoping to win this strategic relationship up to a few weeks ago. MSN was hoping that an AOL partnership would lend its new search technology credibility and provide it with much needed market share. That AOL appears to have chosen Google over MSN not only damages MSN’s search strategy, but shows that Google has supplanted Microsoft as the “safest bet” and preferred partner in the online search and advertising arena.

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