Google acquires stake in AOL, nails down partnership plans

Google has finalized the details of its expanded partnership with Time Warner's America Online subsidiary, including the acquisition of a 5% stake in AOL for $1 billion, Google said Wednesday in a filing with the Securities and Exchange Commission (SEC).

The partnership's definitive agreements, which also include a series of commercial arrangements, were signed on Friday, March 24, and the investment will close in the second quarter of this year, Google said.

For months last year, AOL toyed with the idea of ending its years-long technology and advertising partnership with Google and seeking better terms from a competitor, particularly Microsoft and its MSN Internet unit. But finally in December, AOL decided to continue using for an additional five years Google's search engine to power its general Web search service. It also decided to keep carrying paid search ads Google sells to advertisers, from which AOL gets a commission.

The centerpiece of the expanded partnership is the stake Google agreed to take in AOL, but other parts of the agreement are also significant, such as Google's declared intention to explore, with AOL's help, the market for graphical online ads where it has until now only reluctantly dipped its toes.

In previous statements and SEC filings, Google has also disclosed that the agreement calls for the companies to link their respective instant message services and for AOL to assist Google with its video search service.

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The IDG News Service is a Network World affiliate.