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Google to buy $1 billion AOL stake

All part of the online ad battle with Microsoft.

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Google will pay $1 billion for a five percent stake in AOL, according to The Wall Street Journal. The report appears at the same as the news that Google and AOL are in talks over an advertising partnership.

AOL has spent months in discussions with several companies over possible tie-ups. Recently discussions with Yahoo broke down by the giant ISP has continued meetings with Microsoft and Google, among others.

AOL has long paid to carry paid search ads from the Google network, and split the revenue with Google.

Microsoft has reportedly been pursuing AOL to move the ads business over to the new Microsoft MSN Internet division and drop Google's search engine in favor of MSN Search.

AOL head Jonathan Miller declined to comment about the rumored negotiations but acknowledged AOL is a "swing voter" in the market for sponsored search ads, because of its traffic volume.

"AOL is the leader in various technologies and services in which Google isn’t a significant player," said Guzman financial analyst Philip Remek. "Just by working [more closely] with AOL in this fashion Google will learn and gain capabilities that would have been more difficult to develop on its own."

Becoming an AOL stakeholder might also lead AOL to help Google further develop its Google Talk instant messaging service and Gmail Web mail service.



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