MUMBAI: The world’s most valuable media company Google and US internet services firm America Online, a subsidiary of media conglomerate Time Warner, are expanding their current strategic alliance.
The agreement creates a global online advertising partnership, makes more of AOL’s industry-leading content available to Google users, and includes a $1 billion investment in AOL by Google. This strategic alliance expands on the original relationship between the two companies launched three years ago.
Time Warner chairman and CEO Dick Parsons said, “We are very pleased to build significantly on our special relationship with Google in a way that will meaningfully strengthen AOL’s position in the fast-growing online advertising business and help drive more advertisers to its Web properties. This agreement is key to fulfilling our commitment to realize the potential of AOL’s very large online audience. As digital technologies continue to drive industries together, the great value and opportunity inherent in Time Warner’s structure and array of premier businesses becomes increasingly clear. A critical piece of this strategic alliance will be our content, which we will be making more accessible to Google users.”
Google CEO Eric Schmidt said, “AOL is one of Google’s longest-standing partners, and we are thrilled to strengthen and expand our relationship. Today’s agreement leverages technologies from both companies to connect Google users worldwide to a wealth of new content. We have also created a simple way for AOL Marketplace advertisers to buy and place search-related advertising across the AOL network. This partnership is an important next step for our companies.”
Under the strategic alliance, Google and AOL will continue providing search technology to AOL’s network of Internet properties worldwide. The agreement’s broad range of new features for users and advertisers include:
– Creating an AOL Marketplace through white labelling of Google’s advertising technology
– Enabling AOL to sell search advertising directly to advertisers on AOL-owned properties.
– Expanding display advertising throughout the Google network.
– Making AOL content more accessible to Google Web crawlers;
– Collaborating in video search and showcasing AOL’s premium video service within Google Video;
– Enabling Google Talk and AIM instant messaging users to communicate with each other, provided certain conditions are met; and
– Providing AOL marketing credits for its Internet properties.
AOL and Google have also agreed to extend the term of their existing European relationship, and, subject to mutual agreement, they may extend the AOL Marketplace internationally. In addition, Google, AOL and Time Warner may choose to expand the new partnership to Time Warner’s other advertising opportunities.
Google will invest $1 billion for an effective five per cent equity stake in America Online. This will allow the company to participate in AOL’s future success. Google will become the only shareholder in AOL other than Time Warner. Time Warner will retain management control and full strategic flexibility over AOL, while Google will have certain customary minority shareholder rights, including those associated with any future sale or public offering of AOL.
Time Warner’s media and communications group chairman Don Logan said, “We look forward to working with Google to extend our successful paid-search partnership to other forms of advertising. In addition, we’re excited about the potential for driving more traffic to our network of Internet properties. This agreement builds on our 2004 acquisition of Advertising.com and our other efforts to make AOL a more attractive advertising partner. We’re confident that this partnership marks the next big step in making AOL an even more important player in online advertising.”
Schmidt adds, “Our investment underscores our recognition of AOL as a valuable strategic asset and our desire both to contribute to and participate in its future success. We look forward to working with Dick Parsons and the management teams at Time Warner and AOL to take our already successful AOL relationship to even greater heights.”
AOL chairman and CEO Jonathan Miller said, “AOL and Google have a very successful history working together, and this is an opportunity to take it to a new level that will benefit both companies and the customers we serve. We are excited about working with Google on the next generation of AOL products, while further expanding our presence on the Web. This is a great moment for AOL.”
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