Yesterday, the New York Post ran a story about Microsoft getting in on some AOL action. They reported Time-Warner was currently in advanced talks with the software leviathan over becoming equal partners in the entity known as AOL. Naturally, in the search world media, speculation flew fast and furious.
The most interesting thing to look at is where the speculation goes and in which direction. Yesterday, I wrote my own speculation but ZDNET covered everyone else’s. Many people expressed their opinions on where this would go. Would Microsoft do this deal? Will Google add AOL or perhaps Yahoo? Various search engine experts expressed their opinions on the matter.
The story on this deal was in this morning’s New York Times (NYT) and it goes pretty in depth, discussing the hitches Microsoft could run into, including their relationship with NBC over MSNBC. They also discussed the fact that this move is definitely an attempt to counter the growth of Google.
Right now, Google has a partnership with AOL. The provide search functions for AOL as well as advertising. The NYT cited the fact the 11% of Google’s revenue came advertising on AOL’s sites. Considering Microsoft is launching their own ad program, this will definitely cut into Google.
Assuming Microsoft and AOL do the deed, then this will have a fantastic impact on the search world. The NYT commented that Microsoft is already trying to alter their portal. Going with AOL will solve that problem. How they resolve their instant messaging issue remains key as both want to keep their own IMs going because they see those as core technologies.
But, as far as Google goes, how will this affect them for the future. I couldn’t come up with the number of searches Google gets through AOL but it would have to be significant because of the levels of time AOL users spend going through AOL stuff and using their products. For a hypothetical, suppose 10% of all Google’s searches comes through AOL. This number could be totally off the mark but let’s run with it. So, we shave 10% of Google’s number, based on the Nielsen/NetRatings. This will drop their percentage from 46% to 36%. Then add that 10% to the MSN/AOL meld which takes their 18% to 28%.
This would change the dynamic dramatically. They would now be the most trafficked site on the net, they would an incredibly solid second in search with the potential for growth. Google’s share would drop not only because they’ve lost 11% of their revenue but also because they’ve lost 10% of their search hits. Yahoo moves into the number 3 slot not far behind but number 3 still. People would be spending more time at AOL/MSN and would be using MSN for all their searches. Also keep in mind AOL still has upward of 22 million or so subscribers and MSN has a few million themselves.
One interesting point though is that Google searchers are willing to leave their own site to go to Google for searching. Also, Microsoft has traditionally made computer companies set MSN as the start-up page for IE, but they’ve gone more neutral by allowing computer manufacturers to set the start up pages. And no one should discount Yahoo either. They maintain a lower profile but they still are the most trafficked site on the Internet. If this does happen though, rest assured, the Googlers will have their work cut out for them, new chef or not.
John Stith is a staff writer for Murdok covering technology and business.
