What does this mean?
Looks like Google isn’t ready to give up their relationship serving ads on AOL’s search and content properties. Analysts estimate AOL’s business accounts for 2-4% of Google’s revenue, and I don’t think Google wants Microsoft or Yahoo erasing that revenue. With how much cash Google has right now, buying a small stake of AOL might assure their position without requiring them to buy a huge chunk or all of AOL at once, which would be much riskier.
Probably a smart move for Google. They may overpay for that 5%, but if the revenue and market position they keep is worth it, why not do the deal?