AOL-Microsoft Talks: Google’s Exposure To It

Just thinking this through: It seems that this is a offensive flanking move by Microsoft, intended to hit Google where it hurts most: revenues from partners.

From Google’s latest 10-Q quarterly filing with SEC: “We rely on our Google Network members for a significant portion of our revenues, and we benefit from our association with them. The loss of these members could adversely affect our business…advertising and other fees generated from one Google Network member, America Online, Inc., primarily through our AdSense program, accounted for approximately 12% and 11% of our revenues in 2004 and in the six months ended June 30, 2005, respectively.” And the irony: AOL sold its stake in Google recently for close to a $1 billion.

From its second offering SEC filing: “We expect that Microsoft will increasingly use its financial and engineering resources to compete with us….They can use their experience and resources against us in a variety of competitive ways, including by making acquisitions, investing more aggressively in research and development and competing more aggressively for advertisers and web sites. Microsoft and Yahoo also may have a greater ability to attract and retain users than we do because they operate Internet portals with a broad range of content products and services.”

Yes, this is boilerplate language of SEC filings, but it is certainly indicative of the reasons why Micrsoft is thinking of investing in AOL.

Also read: “MSN Plus AOL Is a Negative for Google“: The length of the initial AOL-Google deal was never announced, but it was renewed 17 months later, in October 2003. Assuming that deal was for 2 or 3 years, it’s time for renewal either one month from now, or one year from now.

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