AOL, Google renew marriage vows

Michael Carroll | September 03, 2010

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AOL dealt a blow to Microsoft’s search ambitions yesterday, making Google its exclusive search provider for the next five years, despite negotiating with Bing.

The deal extends a near decade-long alliance between the ISP and search company, and crucially adds provision for AOL to release videos on YouTube, and mobile search functionality.

It makes Google the exclusive provider of regular and paid search results, and continues the existing revenue sharing agreement on advertising sales, an SEC filing reveals.

Microsoft’s Bing search engine was considered a hot favorite for the AOL contract, Reuters reported.

However, AOL’s boss Tim Armstrong used that interest to play Google off Bing to increase the value of the contract, CNN said.

Armstrong said the new deal improves “all aspects of our partnership,” and is an important step in turning AOL around.

He was keen to eke as much as possible from the lucrative contract to help the firm through a rocky financial period that has seen profits tumble from $173.4 million (€135 million) in 1H09 to a $1 billion loss this year, and revenues fall $4 million to $1.2 billion.

Benchmark analyst Clayton Moran said many had expected Google to force AOL to give ground on its portion of ad revenues, WSJ.com reported.

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Michael Carroll