Perhaps Google Isn’t Out of the AOL Game

December 16th, 2005

Several outlets are reporting that Google is looking to buy a 5% stake in AOL for a cool $1 billion.

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?

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