The rumor is confirmed, and Google Inc. is buying a 5 percent stake in Dulles-based America Online Inc. for $1 billion as part of a far-reaching business and advertising partnership aimed at boosting AOL’s financial prospects as the Internet service struggles with the loss of millions of subscribers.
The five-year deal gives AOL new life by offering it numerous ways to garner more of the billions of dollars being spent on Internet advertising. It also deepens AOL’s relationship with Google, the leading gateway to Internet sites for millions of computer users.
Google or MSN ! AOL didn’t have a big choice, and Microsoft offered hundreds of millions in cash annually if it dumped Google for MSN Search. But the google offer was much better and more lucrative for AOL
Under the agreement, Google will remain the search engine on the AOL service for five years and Google will give AOL millions of dollars of free advertising on the search engine to promote its network of Web sites. AOL also will get the exclusive right to sell online banner ads for Google. AOL will keep about 20 percent of the proceeds from those ad sales, while Google will get about 80 percent.
Google stock rose $7.62 yesterday to $430.15 a share after news of its deal with AOL leaked. Google went public in August 2004 at $85 a share. Most of the previsions said that google stock will reach the $500 by 2006 and according the current evolution, we can expect even more in my opinion. To be continued !
