AOL nears major deal with Google, ends talks with Microsoft

Thursday, December 1st 2005, 8:48 am

By: News On 6

WASHINGTON (AP) _ Time Warner Inc. is negotiating exclusively with Google Inc. to broaden a lucrative advertising partnership with Time Warner's America Online unit, abruptly ending negotiations early Friday with Microsoft Corp., officials close to the negotiations said.

Shutting out Microsoft sets the stage for a high-profile agreement among two titans of the Internet. Among other terms of a deal expected to be announced as early as next week, Google will highlight Time Warner Web properties as sponsored links and AOL will continue to provide Google's search engine to its own subscribers.

Officials described the negotiations on condition of anonymity, because no agreement has yet been formalized.

AOL is effectively Google's biggest customer. It accounted for about $420 million, or about 10 percent, of Google's revenue during the first nine months of this year, according to regulatory filings.

Most of the $420 million came from the ads Google distributes on AOL's Web site. The two companies first began working together in 2002 when Google wrestled away AOL from another online advertising network currently owned by Yahoo Inc.

Microsoft, which increasingly views Google as a fierce online rival, has been negotiating with Time Warner since January but did not propose any cash investment in AOL, officials said.