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America Online on Tuesday agreed to sell a 5 percent stake to Google Inc. in a $1 billion deal that deepens the ties binding two of the Web's most popular sites while thwarting Microsoft Corp.'s efforts to grab a larger piece of the booming Internet advertising market.
Google's aggressive courtship of AOL illustrates how seriously it regards the looming threat posed by Microsoft as the world's largest software company eyes the lucrative field of online search — a specialty that Google has so far dominated to emerge as a corporate powerhouse in its own right.
"This is a very big deal for us, something I have wanted to do for a long time," Google CEO Eric Schmidt said during an interview Tuesday.
Had Microsoft been able to win over AOL, it would have become a much more prominent player in Internet advertising while dealing a financial blow to Mountain View, Calif.-based Google.
AOL's rebuff of Microsoft also demonstrates how much it prizes its relationship with Google, which has built a network where more than 200,000 businesses and Web sites now bid for the right to have their ads distributed across the Internet. Google began distributing ads to AOL three years ago.
In an interview Tuesday, Time Warner Chairman Dick Parsons cited AOL's past relationship with Google as a "compelling" reason to further extend their business ties. "Do I think this is the best way to help AOL realize its full potential? Yes," Parson said.
"We are not giving (AOL) preferential treatment, nor did they ask for it," Schmidt said. "I am making this clear: we will not let a business deal interfere with our search engine results."
Cinching the deal wasn't cheap for Google, costing the company 13 percent of its $7.6 billion in cash. But it's something Google could easily afford, analyst Mahaney said, given that the company's cash flow could generate another $2.2 billion next year.
See the whole story at :
http://news.yahoo.com/s/ap/20051221/ap_on_bi_ge/google_aol
America Online on Tuesday agreed to sell a 5 percent stake to Google Inc. in a $1 billion deal that deepens the ties binding two of the Web's most popular sites while thwarting Microsoft Corp.'s efforts to grab a larger piece of the booming Internet advertising market.
Google's aggressive courtship of AOL illustrates how seriously it regards the looming threat posed by Microsoft as the world's largest software company eyes the lucrative field of online search — a specialty that Google has so far dominated to emerge as a corporate powerhouse in its own right.
"This is a very big deal for us, something I have wanted to do for a long time," Google CEO Eric Schmidt said during an interview Tuesday.
Had Microsoft been able to win over AOL, it would have become a much more prominent player in Internet advertising while dealing a financial blow to Mountain View, Calif.-based Google.
AOL's rebuff of Microsoft also demonstrates how much it prizes its relationship with Google, which has built a network where more than 200,000 businesses and Web sites now bid for the right to have their ads distributed across the Internet. Google began distributing ads to AOL three years ago.
In an interview Tuesday, Time Warner Chairman Dick Parsons cited AOL's past relationship with Google as a "compelling" reason to further extend their business ties. "Do I think this is the best way to help AOL realize its full potential? Yes," Parson said.
"We are not giving (AOL) preferential treatment, nor did they ask for it," Schmidt said. "I am making this clear: we will not let a business deal interfere with our search engine results."
Cinching the deal wasn't cheap for Google, costing the company 13 percent of its $7.6 billion in cash. But it's something Google could easily afford, analyst Mahaney said, given that the company's cash flow could generate another $2.2 billion next year.
See the whole story at :
http://news.yahoo.com/s/ap/20051221/ap_on_bi_ge/google_aol
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