"AOL would have been a huge opportunity and a natural fit to jump start that business for Microsoft. If Google has boxed Microsoft out, it begs the question: How is Microsoft going to flourish online?"Google, and to a lesser extent Yahoo!, have enjoyed dramatic growth in their search advertising businesses over the past year. The companies generate revenue each time a Web user clicks on text advertisements that run alongside Internet search results. A deal with AOL would set the stage for Google to expand into display advertising, taking dead aim at Yahoo, which is entrenched in both paid search and display advertising. Together the different types of advertising make up a market of roughly $12 billion annually. Early talks with Microsoft centered on putting its online network MSN and AOL together, but that was too complex and talks shifted to a joint venture that would include search advertising and display or branded advertising. Less than two weeks ago, Time Warner Chief Executive Dick Parsons said the joint venture was the way Time Warner wanted to go and terms of the deal changed little between then and its final offer. The source said, "What did change a lot was the pressure being applied to Time Warner in the course of that time frame," referring to corporate raider turned shareholder activist Carl Icahn, who is leading a group of shareholders advocating a breakup of Time Warner. Icahn's group, which has a 3.1% stake in Time Warner, says the company is worth more in pieces than as a conglomerate.
"It is my belief that, if the proper partner were allowed to have control of AOL, shareholder value would be much more greatly enhanced than through a half-hearted joint venture that might only serve the purpose of entrenching management"AOL is seen is a critical swing factor on search technology traffic among Internet media rivals Google, Microsoft and Yahoo, just as it once was on online advertising, a category it practically invented in the early 1990s. AOL made surfing the Internet and chatting online a household phenomenon. Time Warner has acknowledged in the past that one of the key missing components of its Internet strategy was a paid search component. Google in $1bn link with AOL - AOL EXECS WIN ONE - Best Syndication - Seattle Post Intelligencer - SYS-CON Media - MSNBC