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Is Google in Market to Buy AOL?

09/22/05

As mentioned yesterday when I summarized the recent discussion concerning an MSN-AOL merge, there is great value in the traffic AOL.com received. AOL currently supplements content and search results with paid advertising licenced through revenue share from Google's AdWords program. Though the terms of the agreement are not publicly available, it is known that Google's share of the arrangement exceeded $382 million in 2004, a number which accounted for nearly 12% of the company's revenue that year.

MSN's acquisition of AOL wouldn't just be a financial hit to its competition... it would also serve as a general publicity powerplay as Microsoft works to establish dominance (or at least competitiveness) in the internet search and portal market currently lead by Google and Yahoo. Given Google's anti-MSN semitism, is it likely that the internet search behemoth from California will just roll over and let Microsoft take this much business off their hands without a fight? There is a possibility that Google would bid on AOL in an effort to protect future revenues and to keep it out of Microsoft's pockets. Google certainly has the money to invest in AOL... the $4 billion raised in a supplemental stock offering last month hasn't yet been earmarked for other purposes that we know of.

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