more on DO READ Summarized -- Google buys 5% ($1B) stake in AOL

[David Farber <dave () farber net>]

Begin forwarded message:

From: salesman44-ip () yahoo com
Date: December 17, 2005 6:03:05 PM EST
To: dave () farber net
Subject: Re: [IP] Summarized -- Google buys 5% ($1B) stake in AOL
Reply-To: salesman44-ip () yahoo com

Dave,

The Post didn't mention this tidbit that was found in
the NYT:

"Finally, around 9 p.m., Richard D. Parsons, chief
executive of Time Warner told Eric E. Schmidt, chief
executive of Google, that he would accept Google's
recently sweetened offer. Google, which prides itself
on the purity of its search results, agreed to give
favored placement to content from AOL throughout its
site, something it has never done before.

I'm not quite certain what is meant by favored
placement, but on the face of it... it does not sound
good for Google's customers.

http://www.nytimes.com/2005/12/16/technology/16cnd-aol.html



--- David Farber <dave () farber net> wrote:

>
http://www.washingtonpost.com/wp-dyn/content/article/2005/12/16/
> AR2005121601892.html
>
>
>
> 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.
>
> ...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.
>
> ...While AOL has been losing subscribers, it is
> still the nation's
> biggest Internet service, with about 20 million
> users who pay for
> Internet access; e-mail; and an array of music, news
> and other content.
>
> ...AOL's most popular feature is its free
> instant-messaging service,
> which has about 43 million users who chat online
> through text
> messages and provides an attractive platform for
> Google to
> dramatically expand its presence in free telephone
> service over the
> Internet.
>
> ...Icahn, who has been pressuring Time Warner to
> consider the sale of
> a majority stake in AOL, spin off its cable division
> and use cash to
> buy back tens of billions of dollars worth of its
> stock, criticized
> the AOL-Google agreement yesterday.
>
> ...The existing arrangement -- under which Google
> provides text-based
> ads and free search results on AOL -- will continue,
> with AOL keeping
> 80 percent of those ad proceeds and Google taking 20
> percent.
> Businesses pay for such ads, which appear to the
> right of and above
> the free Google search results, only when computer
> users click on them.
>
> As part of the new agreement, AOL also gains the
> right to sell Google-
> generated text-based ads that appear on the America
> Online network of
> Web sites.
>
> ...One source said AOL will also have the right to
> buy graphic ads
> that appear alongside the text-based ads Google
> traditionally has
> displayed to the right of its free search results.
>
> ...The five-year deal gives Time Warner the choice
> of maintaining its
> 95 percent ownership stake or spinning off a portion
> of AOL to
> shareholders to boost its stock price.
>
> ...Lawyers for Google and AOL will work out the
> final details of the
> new alliance over the weekend, before Time Warner
> board members, who
> have given their informal consent to the arrangement
> already, vote on
> the transaction.
>
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