Google nears $1bn deal for AOL stake

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The Independent Online

Time Warner and Google were in the final stages last night of agreeing a partnership over AOL in a move which could bring to an end an intense competition between the search giant and its rival Microsoft.

Google, which provides internet search technology for AOL, may pay about $1bn (£560m) for a 5 per cent stake in the business. It might also allow AOL more control over ­ and revenue from ­ the sale of ads on its website, which are generated when people search the internet.

Google and AOL entered exclusive negotiations yesterday. The development is a blow for Microsoft, which had hoped to woo AOL away from Google to its own search engine, MSN.

Microsoft has become increasingly concerned about Google's exponential growth and has been struggling to gain its foothold in the lucrative internet search market. Gaining AOL, whose sites are viewed by millions of people, would have been a major boost.

Talks over the future of AOL have been tortuous, with various parties including Yahoo! and Comcast having discussed a partnership with Time Warner. Some believed Time Warner would sell all of AOL, while others thought a deal would be confined to a partner taking a stake in AOL. Most recently, industry watchers said Time Warner wanted only to strike a new ad revenue deal with a partner.

The negotiations come at a tricky time for Time Warner, the owner of CNN and the Warner Brothers film studio. The billionaire investor Carl Icahn is waging a campaign to replace a majority of its directors. He has threatened to sue Time Warner's directors if they sell a stake in AOL at too low a price.

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