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December 21, 2005

Google/AOL deal done

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CNN/Reuters is reporting that the much talked about $1B deal is now a reality and the contracts are inked.

The most talked about part of the deal–that AOL has talked Google into using graphical ads on their otherwise pristine search results pages is discussed in the CNN article as “[allowing] AOL to sell graphical ads to Google’s fast-growing ad network.” Google’s ad network, of course, is AdSense not AdWords. Either the NYTimes got it wrong when they claimed that AOL wanted Google to show ads on Google’s SERPs or CNN doesn’t know what the ad network really is. Hopefully, clarification of this will be forthcoming.

Either way, Google just achieved a major coup. As was pointed out a little while back, AOL has been pivotal in several wins over the last year. Though they’re never the main reason for anyone to do anything, AOL often serves as the tipping point that makes a deal just that much better. AOL’s walled garden and loyal user base bring incredible traffic. Furthermore, part of the agreement deals with how AOL will be working to make their internal pages more accessible to Google’s spider, increasing Google’s already impressive index even more in a way that the other search engines can’t compete with.

Some aren’t so sanguine however. Investor Carl Icahn rated the deal “disastrous” because the deal could undermine a merger later on for the two companies. Mr. Icahn’s group holds a 3.1 percent stake in Time Warner, the parent company of AOL.

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