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Google Businesses The Internet America Online

Google To Purchase Stake In AOL For $1 Billion 222

Posted by Zonk from the that-is-a-lot-of-free-cds dept.
Lord Haha writes "It appears that Google may be on the verge of purchasing a 5% stake in AOL." From the article: "A tie-up with Google would make sense. Time Warner has been losing out online to rivals like Microsoft and Yahoo. For its part, Google may be interested in getting access to AOL's e-mail and instant messaging service. It would strengthen Google's hand against rivals Yahoo and Microsoft, who have well-established webmail and instant messaging services. Google is a relative newcomer to this area with Gmail and Googletalk." More commentary on News.com. Big change from just a few days ago.
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Google To Purchase Stake In AOL For $1 Billion More

Google To Purchase Stake In AOL For $1 Billion

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  • Has to be said (Score:5, Funny)

    by gbulmash ( 688770 ) * <semi_famous@yah o o . c om> on Friday December 16, 2005 @05:15PM (#14274721) Homepage Journal
    The obvious post Google/AOL merger company name...

    GoooooooooAOL!!!!

    - Greg

  • cd mailer (Score:5, Funny)

    by Romancer ( 19668 ) <romancer AT deathsdoor DOT com> on Friday December 16, 2005 @05:16PM (#14274736) Journal
    Try Google for 30 days with unlimited searches!

    (your firstborn will be named AOL234 if you do not cancel)

  • New instant messenger? (Score:5, Funny)

    by op12 ( 830015 ) on Friday December 16, 2005 @05:18PM (#14274758) Homepage
    I can't wait for Google + AIM = GAIM :)

    • Re:New instant messenger? (Score:5, Interesting)

      by mccalli ( 323026 ) on Friday December 16, 2005 @05:25PM (#14274861) Homepage
      I like the pun, but I'm going to take the idea seriously for a moment.

      Google do a Jabber-based service. AOL of course do AIM. Do you think they'd consider merging the two networks? Because a Jabber-based AIM would be a major boost for the protocol. They're adding voice to it, perhaps video next?

      Of course I'm getting ahead of myself, 5% is just that - 5%. But still, it's worth a thought. And yes, I'm biased. I'm an iChat user which supports Jabber, and it would be useful to have the Jabber protocol grow in functionality and see the Jabber gateways to other networks start acting as a universal switching point.

      Cheers,
      Ian

      • So what is Google Talk about then?
      • AIM already does video and voice chat, and has for a long time. They also have the majority of market share. What would they get out of switching to a jabber based network? And googles not exactly a good jabber citizien; They disallow server to server messages, which is the only thing that makes jabber 'open'. Just open docs on a protocol means nothing, MSN's protocol was IETF certified, aim had TOC open, etc. (I realise there is plenty of caviets involved, but so far third party clients seem to be doing fi
    • What is interesting is that if AIM opens their network to Google, Google would most likely pressure them into going through the open protocol. If they did that, it would mean that Yahoo and MSN could join it as well. Since Google has the most invested interest in getting all the networks open, since they have by far the smallest user base, it would significantly benefit them to get access to AOL's network, even if it meant Yahoo and MSN could go along for the ride (which Google has encouraged anyway). Th

  • Bad Idea For Google (Score:2, Insightful)

    by pdevor ( 603443 )
    People will say it's a good idea so Google can hold onto AOL's subscriber base, but realistically if AOL aligned with microsoft, people would just leave AOL's sinking ship even faster than they already are.

    Bottom line: Google can find a better way to spend that money.

  • With a budget of $1bn... (Score:5, Insightful)

    by Andy_R ( 114137 ) on Friday December 16, 2005 @05:20PM (#14274782) Homepage Journal
    Couldn't Google simply start it's own ISP and grow it to at least 5% the size of AOL? That would give it all the leverage (or more because they can't be outvoted by the other 95%) with none of the nasty associations.

    • Re:With a budget of $1bn... (Score:5, Insightful)

      by FatRatBastard ( 7583 ) on Friday December 16, 2005 @05:35PM (#14274973) Homepage
      Google aren't buying an ISP, they're buying a relationship. Go take a look at Google's financial statements. AOL accounts for a HUGE chunk of Google revenue. This is exactly why Google, Yahoo and Microsoft have been clamoring to throw money Time Warner's way: whoever got the deal would almost certainly get AOL's paid search / advertisement business. Google and Yahoo want it for the revenue stream; MS less so for the money itself, more for cutting off the revenue supply of competitors (i.e. Google).

      Anything else Google gets from AOL in this deal is just icing on the cake.
    • If Google has a wholly owned subsidiary ISP, look out for anti-competitive practice lawsuits. They are buying AOL stock for a different reason, as plenty of people have mentioned, and as minority shareholders they are a little safer.

  • How to get around "Don't be evil" ? (Score:5, Insightful)

    by Anonymous Coward on Friday December 16, 2005 @05:20PM (#14274785)
    Is this how they get around their "Don't be evil" (phoney) mantra? By buying and outsourcing all the evil to a company that's very good at being evil?
    • Outsourcing all the evil? Isn't that usually called "rendition?"
    • I'd be interested in hearing some examples of why AOL is evil as opposed to crappy.

      I guess one thing that comes to mind is how they try to make it difficult for people to cancel.

      I'm just not as familiar with AOL as I am with MS/Yahoo/Google.
      • I'd be interested in hearing some examples of why AOL is evil as opposed to crappy.

        Have you ever tried to cancel from them? Their tactics 1) keep you from jumping ship and 2) continuing to charge your credit card are pretty evil.

    • By buying and outsourcing all the evil to a company that's very good at being evil?

      I'd hardly call purchasing 5% of a companies shares "buying a company" to outsource to. I think its more of a technique to make AOL not be evil during the share holder meetings.

    • Re:How to get around "Don't be evil" ? (Score:5, Insightful)

      by The Lynxpro ( 657990 ) <[moc.liamg] [ta] [orpxnyl]> on Friday December 16, 2005 @07:06PM (#14276087)
      "Is this how they get around their "Don't be evil" (phoney) mantra? By buying and outsourcing all the evil to a company that's very good at being evil?"

      Yeah, because AOL is SOOOOO evil. They were so evil that they bankrolled TiVo when it was starting out. So evil that even after Netscape became a non-entity, they ponied up money to spin Mozilla off as a non-profit so that development could still happen without pesky TimeWarner shareholders demanding it be closed down. So evil that they partnered with iTunes so that people could use iTunes through their AOL user name, thereby improving the audience of iTunes. So evil that they aided the antitrust litigation against Microsoft. So evil that they partnered with Apple over iChat. So evil that they provided a great deal of bandwidth for popular podcasts like *This Week in Tech* so that the podcasters didn't have to pay for the bandwidth.

      Yep, that's really evil in my book.

      I really wish Google took over a larger chunk of AOL, myself. Tie MapQuest to GoogleMaps. GoogleTalk to AIM. AOL through a Google sponsored Firefox web browser. DigitalCities and MovieFone directly tied to AdSense. WinAmp spun off as an open source non-profit entity. Not to mention leveraging the AOL brand for commercial wifi.

      Oh, not to mention getting back to that Steve Case goal of smashing Microsoft which the rest of TimeWarner had objections to...

  • Why? (Score:3, Insightful)

    by soccerUSA ( 933956 ) on Friday December 16, 2005 @05:20PM (#14274786)
    Makes no sense to me. Why buy 5% of a sinking dial-up provider?
    • Makes no sense to me. Why buy 5% of a sinking dial-up provider?

      20 million or so paying subscribers

      Radio@AOL with XM Radio, sitting comfortably at #1 or #2 in the Aribitron ratings. The best free internet radio service around. Great sound, no time-outs, free access through the web, Winamp, or the old Radio@Netscape client.

      AIM

  • Wait (Score:4, Insightful)

    by Trip Ericson ( 864747 ) on Friday December 16, 2005 @05:21PM (#14274798) Homepage
    But doesn't AOL own the rights to the Netscape browser (repackaged Firefox)? If so, what does this do to the rumor about Opera?
    • Nothing -- Opera denied it in the very article /. linked to.
      • I'm aware, but still, the rumors are still out there. It wouldn't be the first time such rumors were correct (think iPod Video).

    • Re:Wait (Score:4, Funny)

      by eclectro ( 227083 ) on Friday December 16, 2005 @06:02PM (#14275303)
      If so, what does this do to the rumor about Opera?

      The fat lady hasn't sung yet??

    • Doesn't matter, AOL will still use Internet Explorer.
    • They're buying Opera too, why not? As well as iCab and Internet Explorer, and they've even put up a bid for Amaya. And they're starting Google Music, funding a lab with Sun and Microsoft, and scanning every word that was ever printed. The USGS will soon be a subsidiary of Google Maps. Google will soon buy Microsoft, Intel, Apple, and the Louvre. Google won't actually buy the Library of Congress; rather, it will be given to Google in an act passed unanimously by the House and Senate.

  • What happened to their motto? (Score:4, Insightful)

    by kalirion ( 728907 ) on Friday December 16, 2005 @05:22PM (#14274822)
    Instead of "Do no evil" it will be "Partner up with evil"?
  • hmmmmm..... Can Google/AOL both distribute ten bajillion CDs ~and~ do no evil? ;)
    • Depends on how they're distributed. Mass mailings are pretty evil, because they get sent to people who don't want it and will just toss them in a landfill*. Setting up a "Free CD" kiosk at a computer store isn't so much, since only those who are interested will pick them up.

      *Or find alternative uses for them. I will admit to having used AOL coasters on my coffee table in the past.
    • "hmmmmm..... Can Google/AOL both distribute ten bajillion CDs ~and~ do no evil? ;)"

      Certainly. As long as they put OpenOffice on those CDs. That would sure put a world of hurt on the street value of Microsoft Office, now wouldn't it?

  • Spelling Nazi Alert (Score:5, Funny)

    by doi ( 584455 ) on Friday December 16, 2005 @05:26PM (#14274874)
    Time Warner has been losing out online

    You spelled this word correctly on Slashdot, you insensitive clod!

  • Is AOL really worth the $20 billion this investment (assuming its true) would value them at? It would value them at about 1/4 the entire value of TWX. Seems kinda high to me. Then again, its not as if I'm an expert at asset valuation...
    • Intangible assets such as subscriber base don't really factor into the value of a company since they are impossible to measure. Just ask Reader's Digest.
    • "Is AOL really worth the $20 billion this investment (assuming its true) would value them at? It would value them at about 1/4 the entire value of TWX. Seems kinda high to me. Then again, its not as if I'm an expert at asset valuation..."

      AOL ISP. AIM. MapQuest. DigitalCities. MovieFone. Netscape brand. Etc.

      And had AOL been successful as becoming the premiere branded ISP for the cable companies, AOL would still have a high market valuation. Let us not forget that it was the TimeWarner brass who chose

  • Not News - Guesswork (Score:5, Insightful)

    by VirtualAdept ( 43699 ) on Friday December 16, 2005 @05:30PM (#14274916)
    So, I took a look at the articles in question. No sources named whatsoever, no comments from company officials, nothing at all to indicate that this is actual news and not just news analysts throwing darts at a wall somewhere and hitting "Google buys AOL". Again, for that matter, since this is something like the third time that news reports of this deal have happened.

    Wake me up when actual news occurs - complete with named sources or a press release, or something to make me think that this is more than just some writers trying to sound like they're insiders.

  • So finally... (Score:2, Offtopic)

    by chris_eineke ( 634570 )
    So finally they're completing the Googol... :P

  • Why? (Score:3, Insightful)

    by Fortress ( 763470 ) on Friday December 16, 2005 @05:32PM (#14274941) Homepage
    I don't get it. Why would Google to do this? Where is the percentage?

    I really don't believe that they're after AOL's email service, as GMail is already the class of the field in webmail and a strong competitor for Yahoo and Hotmail. As for AIM, I thought Google launched their own IM service a while ago and it is likely to grow as well as previous Google projects.

    Is Google after customer data? An entry into the ISP field? I don't get it.

    • Re:Why? (Score:5, Insightful)

      by chrisgeleven ( 514645 ) on Friday December 16, 2005 @05:42PM (#14275048) Homepage
      Simple really. Google keeps AOL from Microsoft.

      Google is used by AOL Search right now. Just the amount of traffic and ad revenue from that results in like $400 million per year in Google's coffers and is 10% of their traffic.

      Without AOL, it deals a decent blow to Google, especially if it were Microsoft who takes it.

      I'm sure this deal will result in a tighter integration between Google and AOL services. Perhaps AIM will be opened up for real to any client, especially GTalk. Perhaps Gmail (or at least its interface) will replace AOL Mail.

      Who knows.

      The main thing though is that Google is paying $1 billion, but will easily recoup that due to the $400+ million a year in revenue it gets from AOL to begin with. This deal is all about preventing Microsoft from expanding in the search area.
      • Interesting hypothesis... it's amazing how these companies work. I think most /.ers would agree with me in saying that AOL is on its way out. Their business model is outdated and they seem to be on their way to becoming just another portal (a la HotBot). To think that another corporation would pay them $1 billion for a 5% stake is unimaginable in my mind.

  • It was bound to happen... (Score:3, Interesting)

    by ajdowntown ( 91738 ) on Friday December 16, 2005 @05:35PM (#14274967) Homepage
    Ok, this could be a great thing for google. Granted, 5% is not a lot of stock by any means, but it is a start to gaining even a larger user base.

    Think about people who use AOL. They don't tend to be people that use anything else. So, imagine a google branded browser, automatically using google search, being able to check you aol mail in gmail, and talking back and forth over the aim network. And, even above that, AOL still owns some broadband ISPs, so if Google were looking to get into the market, this is how they could do it. While AOL might be a sinking ship, Google is exactly the company that could bring them out of the slump. So, as I see it, a win-win situation for both companies...
  • AOL appears to be circling the drain, why not wait 3 or 4 months and get 20% for the same price?

  • favored placement for aol? (Score:5, Interesting)

    by slizz ( 822222 ) on Friday December 16, 2005 @05:45PM (#14275071) Homepage
    from a nytimes article [nytimes.com] on the subject: "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 dont know if this means that google will be changing search results, but if it does, this is a pretty drastic philosophy change, and something that seems to bode extremely negatively for googles future
    • Good observation, but the article's pretty vague about it. It could be something as simple as AOL soaking up unused ad inventory. For example, i notice that if I search for the lamest keyword in the world, I get "Buy your xxx at eBay!" Maybe we'll get "Discuss xx at AOL!".

      D
    • Agreed. But the evil could be attenuated if: a) Google tells you something like "AOL says this is good ..." or b) puts the content separately and marked-off or c) does not mess with the SEARCH results.
    • I think a lot of people (including me) will be watching what happens with this very closely. For Google's own sake, I hope they don't do anything stupid, because their 'do know evil' policy is definitely a lot of what's keeping them afloat now that the Big Boys have Google in their sights.
  • This comment from the NYTimes coverage [nytimes.com]:

    "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."

    The beginning of the end, if true.

    • Not so fast...

      The sentence from the NYT is carefully constructed to be ambiguous. I would be shocked if Google were actually agreeing to bias its search results to favor AOL. However, favoring AOL content "throughout its [Google's] site" might just mean giving AOL content preferential treatment in sponsored links, as some other coverage has indicated, and perhaps in other places outside the search results themselves.

      Of course, sponsored links can be considered a kind of search result, but since they're sp
    • I will now look into my crystal ball...

      Headline: New internet search engine startup gives unbiased results, earns billions; movie at 11.

      Someone will follow google's path and become "the next big thing" the same way google did. It's an easy formula:

      1. Make search engine with no ads and a clean, quick interface.
      2. Start selling the technology to companies in a 1u server.
      3. Sell text-based advertising.
      4. Massive IPO.
      5. 5. Start using benjamins to light your cubans.

  • Other Technologies (Score:2, Insightful)

    by bbambrey ( 582419 )
    I think something to also consider is AOL spent years buying up random small technologies and companies... but then did nothing with them. A couple examples from the top of my head are Winamp and Netscape. Include this with the obvious items that have already been listed and who knows what could happen. I don't know what Google may or may not be after but there could be potential there. More than likely this is just a move to keep AOL from MS for the time being. After all it is only a 5% purchase not a me
  • What does this mean for the AOL browser?
    Up to this point it has been using the IE HTML engine, does this mean AOL might switch over to gecko?
    Surely Google may have some persuasion powers in what html engine AOL uses in the future.
  • Because that sounds pretty damned high to me. I wouldn't have put it over $10 billion, but then again, I'm no economist.
  • I'm astounded by the crap I'm reading here in the comments. The benefits for Google are enormous and obvious, and the price is more than fair. Everyone is so burnt on their perception of the AOL client with it's 'me too' members they don't see what it really is.

    1) AOL makes $1 billion in *profit* every year. Makes a $20 billion valuation easy to grasp. Yes, 2/3 of that is from dial up users that's eroding. But the advertising portion is growing dramatically every year (per eyeball internet ads are still

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