September 19, 2005 3:10 PM PDT

Google to bid on AOL?

Google could try to bid for America Online to pre-empt a Microsoft takeover and protect the $380 million in revenue Google gets from its biggest partner, according to an analyst.

"We believe it is entirely possible that Google could consider making a bid for AOL as well," Lauren Rich Fine, an analyst at Merrill Lynch, wrote in a Friday report on the implications of an AOL-Microsoft Network deal. "This would certainly protect Google's revenues from AOL as well as enable Google to keep 100 percent of the search advertising revenues as well as gain a significant amount of content."

The New York Times reported on Thursday that Microsoft was in talks with AOL's parent Time Warner on merging AOL with MSN and other options as a way to counter the serious competitive threat Google poses in the portal and search market.

The Wall Street Journal has reported that AOL may be considering switching its search engine from Google to MSN, which could cut Google's earnings per share by between 5 percent and 10 percent, the report said. AOL generated about 12 percent of Google's revenues in 2004, or $382 million.

Google began providing search services for AOL in 2002, replacing Overture, which was acquired by Yahoo. In 2003, Google and AOL broadened their agreement. Google pays AOL every time someone clicks on one of its sponsored links and lets advertisers bid for the AOL search result placements for specific keywords users enter.

The Merrill Lynch note came within days after Google raised $4.1 billion in a secondary stock offering.

Google declined to comment. (Google representatives have instituted a policy of not talking with CNET News.com reporters until July 2006 in response to privacy issues raised by a previous story.)

A Time Warner representative declined to comment, and an AOL representative did not immediately return a call seeking comment.

5 comments

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There goes Google again...
... having fun... :D
Posted by Mendz (519 comments )
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AOL/GOOG makes better sense
They already have an established strong strategic partnership. GOOG raised the equity capital precisely to defend its existing competitive advantage and revenue streams (along with exploiting new opportunities as they arise). From AOL's POV, one must wonder what on earth they'd want with MSN search, and destroy their existing revenue stream from GOOG? One suspects that even MSFT well knows that GOOG has them beat on search; and, contrary to popular opinion, will not seriously invest much more in their ISP-related services like search. One might think that MSFT has bigger goods in their sites now, some outfit that better compliments their security drive like SYMC.
Posted by malabrm1 (36 comments )
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Not talking
It makes me mad how none of your stories contain a response from Google. It makes me read another sites news, which is troubling because I've been reading News.com for awhile now.
Posted by (7 comments )
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Child pouting
Google is pouting about someone telling the truth about them

it is childish.

when they grow up then they will command more respect... currently they are just children trying to play in a grown-up world.
Posted by qazwiz (208 comments )
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How many companies will Google buy?
perhaps a googel? (remember, they gor their name by misspelling the (then) reciently defined name for a one followed by a hundred zeros)
Posted by qazwiz (208 comments )
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