It’s a done deal, as Time Warner accepted the $1 billion bid from Google for a 5 percent stake in AOL, who had been poised to accept an offer from Microsoft before Google’s late push. Google gets its content provider, and AOL gets a spot in Google’s far-flung ad network.
The deal that Google needed even more than Microsoft did was fueled with cash from Google’s secondary stock offering; now we know part of the reason they wanted to raise more money on top of the returns from their 2004 IPO.
Reuters added another piece of the puzzle that hadn’t been mentioned elsewhere. According to the report, Google Talk users will be able to communicate with AOL’s AIM users, who number around 22 million.
While the respective companies are probably thrilled with the deal, investor Carl Icahn was not. He publicly stated via letter that the board of Time Warner was “on the verge of making a disastrous decision.”
That decision values AOL at $20 billion. Analysts cited in a Bloomberg report mostly saw a value of $10 billion to $15 billion for that part of the business.
The impact the deal will have on most users comes through advertising. Those familiar text ads that appear on Google search result pages should begin changing for many queries to graphical ads. AOL will have to bid on placing graphical ads there, but will do so out of a $300 million advertising budget alloted by Google as part of the investment.
Some sites have been occasionally displaying graphical ads provided by Google already. Part of Time Warner’s requirements for the deal speeds up the timetable for putting graphical ads on Google’s search pages.
—
Email the author here.
Add to document.write(“Del.icio.us”) | Yahoo My Web
David Utter is a staff writer for murdok covering technology and business.
