America Online (AOL) formally announced a revived partnership with Google Inc on Tuesday, a deal that affirmed AOL's value less than a year after a chorus of calls for its parent, Time Warner Inc, to dump the division as a lost cause.
Google said it had agreed to buy 5 percent of AOL for US$1 billion and to provide advertising credits for AOL to promote its Web sites on Google's search service. Those advertising credits total US$300 million over the five-year term of the deal, according to an executive involved in the negotiations.
In return, AOL agreed to continue to use Google as its Web search engine and to display its search-related advertising, as it has since 2002.
Richard Parsons, the chief executive of Time Warner, said the deal would help accelerate AOL's shift from selling Internet access subscriptions to running free advertising-supported Web sites.
"By sticking with our current partner, we have the best partner, the most technologically sophisticated and powerful company in the ads space, and we have deepened our relationship with them," he said. "We are aligned around the opportunities to drive more revenue in this fast-moving space than either of us could do separately."
Google chief executive Eric Schmidt said the deal offered a way to accelerate its goal of expanding from simple text ads associated with search to a broader range of advertising formats including graphical display ads. Under the arrangement, AOL's sales force will be able to sell both search advertising and display advertising on Google's own Web site and the many sites on which Google places ads.
"We have not offered a complete advertising solution until this point. This is about expanding the network of our revenue and partners and advertisers, and we couldn't do that by ourselves," Schmidt said.
Google beat out Microsoft Corp, which had made an aggressive bid to win AOL as the premier outlet for its new search and advertising services. Microsoft had offered a large guaranteed payout for America Online and a joint venture to sell ads.
The Google-AOL deal involves a range of other forms of cooperation. Notably, AOL will allow users of Google's new Google Talk instant messaging system to chat with users of AOL's messaging network, the largest in the country. Until now, AOL has resisted linking its system with those run by its major rivals -- including Yahoo Inc and Microsoft, which recently agreed to link their own. It does connect to Apple Computer Inc's message system and several services aimed at corporate users.
There will be a somewhat complex procedure to link the two systems, however. Google Talk users will need to add an AOL screen name to communicate with other AOL users.
Google will help drive users to AOL's Web sites by giving it the free advertising and by highlighting AOL's video programming in its growing video search service.
"If AOL is going to become a powerhouse again, it needs to return to growth," said Jordan Rohan, an analyst with RBC Capital Markets. "This is a first step. By partnering with Google, maybe some of the Google magic will rub off."
But Rohan said the likelihood of this deal restoring AOL to its former pre-eminent position online is low.
So far, AOL's effort to promote its Web sites have hardly produced significant results.
In November, 70 million people, or 41 percent of the Internet audience, visited AOL.com, the company's lead Web site, according to comScore Media Metrix. That is down from 48 percent of Internet users a year ago, before AOL started moving much of its better content from its paid service to the free AOL.com.
Time Warner investors appear not to be impressed by the deal. The company's shares have trended down since word that it had selected Google emerged on Friday. Time Warner formally announced its deal about 6pm on Tuesday. In after-hours trading, its shares rose by US$0.01 to US$17.75. Google's shares reached US$431.25, up US$1.51, after hours.
AIR DEFENSE: The Norwegian missile system has proved highly effective in Ukraine in its war against Russia, and the US has recommended it for Taiwan, an expert said The Norwegian Advanced Surface-to-Air Missile Systems (NASAMS) Taiwan ordered from the US would be installed in strategically important positions in Taipei and New Taipei City to guard the region, the Ministry of National Defense said in statement yesterday. The air defense system would be deployed in Taipei’s Songshan District (松山) and New Taipei City’s Tamsui District (淡水), the ministry said, adding that the systems could be delivered as soon as the end of this year. The US Defense Security Cooperation Agency has previously said that three NASAMS would be sold to Taiwan. The weapons are part of the 17th US arms sale to
INSURRECTION: The NSB said it found evidence the CCP was seeking snipers in Taiwan to target members of the military and foreign organizations in the event of an invasion The number of Chinese spies prosecuted in Taiwan has grown threefold over a four-year period, the National Security Bureau (NSB) said in a report released yesterday. In 2021 and 2022, 16 and 10 spies were prosecuted respectively, but that number grew to 64 last year, it said, adding that the Chinese Communist Party (CCP) was working with gangs in Taiwan to develop a network of armed spies. Spies in Taiwan have on behalf of the CCP used a variety of channels and methods to infiltrate all sectors of the country, and recruited Taiwanese to cooperate in developing organizations and obtaining sensitive information
BREAKTHROUGH: The US is making chips on par in yield and quality with Taiwan, despite people saying that it could not happen, the official said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has begun producing advanced 4-nanometer (nm) chips for US customers in Arizona, US Secretary of Commerce Gina Raimondo said, a milestone in the semiconductor efforts of the administration of US President Joe Biden. In November last year, the commerce department finalized a US$6.6 billion grant to TSMC’s US unit for semiconductor production in Phoenix, Arizona. “For the first time ever in our country’s history, we are making leading edge 4-nanometer chips on American soil, American workers — on par in yield and quality with Taiwan,” Raimondo said, adding that production had begun in recent
Seven hundred and sixty-four foreigners were arrested last year for acting as money mules for criminals, with many entering Taiwan on a tourist visa for all-expenses-paid trips, the Criminal Investigation Bureau (CIB) said on Saturday. Although from Jan. 1 to Dec. 26 last year, 26,478 people were arrested for working as money mules, the bureau said it was particularly concerned about those entering the country as tourists or migrant workers who help criminals and scammers pick up or transfer illegally obtained money. In a report, officials divided the money mules into two groups, the first of which are foreigners, mainly from Malaysia
RSS