Aol, Google Announce Billion-dollar Alliance

[george]

AOL, Google announce billion-dollar alliance

SAN FRANCISCO: -- Web giants AOL and Google announced a wide- reaching alliance Tuesday that sees Google paying 1 billion dollars for a 5-per-cent stake in AOL.

The deal, which values AOL at 20 billion dollars, builds on an existing agreement between the companies in which Google supplied ads to AOL's web sites and split the revenue with Time Warner's AOL unit.

The agreement also calls for Google to provide some 300 million dollars worth of advertising on its web pages to AOL, and to feature AOL's video offerings on Google Video, a way for users to find and view video programmes over the Internet.

Also included in the deal was an agreement to let users of Google's instant messaging system communicate with AOL's industry leading AIM system.

The two companies reached their agreement despite attempts by Microsoft to have its Internet arm MSN replace Google as AOL's main search partner. Microsoft had been considered a frontrunner in lengthy negotiations, but AOL decided last week to open exclusive negotiations with Google.

"This agreement is key to fulfilling our commitment to realize the potential of AOL's very large online audience," said Time Warner chief executive Richard Parsons. "A critical piece of this strategic alliance will be our content, which we will be making more accessible to Google users."

Google chief executive Eric Schmidt said: "Today's agreement leverages technologies from both companies to connect Google users worldwide to a wealth of new content. We've also created a simple way for AOL Marketplace advertisers to buy and place search-related advertising across the AOL network. This partnership is an important next step for our companies."

--Agencies/DPA 2005-12-21