[IP] Summarized -- Google buys 5% ($1B) stake in AOL
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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