Google invests $1 in AOL for 5% stake

Posted on Wednesday, December 21 2005 @ 1:21 CET by Thomas De Maesschalck
Some details about the talks between AOL and Google were released last week and today both companies made it official. Google agreed to invest $1 billion for a five percent stake in AOL and there are also a couple other things.

I understand the need for Google to extend their relation with AOL but I sure hope they haven't sold their soul over this deal.. Here's the press release:

The agreement creates a global online advertising partnership, makes more of AOL's industry-leading content available to Google users, and includes a $1 billion investment in AOL by Google. This strategic alliance expands on the original relationship between the two companies launched three years ago.

Google Chief Executive Officer Eric Schmidt said: "AOL is one of Google's longest-standing partners, and we are thrilled to strengthen and expand our relationship. 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."

Serving Users and Advertisers
Under the strategic alliance, Google and AOL will continue providing search technology to AOL's network of Internet properties worldwide. The agreement's broad range of new features for users and advertisers include:
  • Creating an AOL Marketplace through white labeling of Google's advertising technology - enabling AOL to sell search advertising directly to advertisers on AOL-owned properties;
  • Expanding display advertising throughout the Google network;
  • Making AOL content more accessible to Google Web crawlers;
  • Collaborating in video search and showcasing AOL's premium video service within Google Video;
  • Enabling Google Talk and AIM instant messaging users to communicate with each other, provided certain conditions are met; and
  • Providing AOL marketing credits for its Internet properties.
  • AOL and Google have also agreed to extend the term of their existing European relationship, and, subject to mutual agreement, they may extend the AOL Marketplace internationally. In addition, Google, AOL and Time Warner may choose to expand the new partnership to Time Warner's other advertising opportunities.

    Google Investment in AOL
    Google will invest $1 billion for an effective 5% equity stake in America Online, Inc., allowing the company to participate in AOL's future success. Google will become the only shareholder in AOL other than Time Warner. Time Warner will retain management control and full strategic flexibility over AOL, while Google will have certain customary minority shareholder rights, including those associated with any future sale or public offering of AOL.

    Additional financial terms of the agreement were not disclosed.

    Don Logan, Chairman of Time Warner's Media & Communications Group, said: "We look forward to working with Google to extend our successful paid-search partnership to other forms of advertising. In addition, we're excited about the potential for driving more traffic to our network of Internet properties. This agreement builds on our 2004 acquisition of Advertising.com and our other efforts to make AOL a more attractive advertising partner. We're confident that this partnership marks the next big step in making AOL an even more important player in online advertising."

    Mr. Schmidt continued: "Our investment underscores our recognition of AOL as a valuable strategic asset and our desire both to contribute to and participate in its future success. We look forward to working with Dick Parsons and the management teams at Time Warner and AOL to take our already successful AOL relationship to even greater heights."

    Jonathan Miller, AOL's Chairman and Chief Executive Officer, said: "AOL and Google have a very successful history working together, and this is an opportunity to take it to a new level that will benefit both companies and the customers we serve. We are excited about working with Google on the next generation of AOL products, while further expanding our presence on the Web. This is a great moment for AOL."


    About the Author

    Thomas De Maesschalck

    Thomas has been messing with computer since early childhood and firmly believes the Internet is the best thing since sliced bread. Enjoys playing with new tech, is fascinated by science, and passionate about financial markets. When not behind a computer, he can be found with running shoes on or lifting heavy weights in the weight room.



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