The Wall Street Journal reported yesterday that Microsoft executives have met representatives of Time Warner Inc. (Owners of AOL) suggesting that Microsoft had a plan B from Yahoo’s failed buyout. Microsoft Live Search has been trying to compete with Google for some time and seem to have decided they need people with experience to make it successful.

With Google’s possible move to controlling Yahoo’s advertising stream, Microsoft has become a little worried about the overall outcome. AOL hold approximately 11% of the US advertising market matching Live Search’s 11% according to eMarketer.

AOL’s current advertising is already managed by Google, it is unclear how long this deal would be honoured for if any deal took place, or even what would happen to businesses using adwords to advertise on AOL. Whether or not it goes ahead, we can only speculate.

What would be Microsofts benefit to buying AOL? Microsoft would increase it’s online services, particularly in the social networking scene. They would obtain TMZ, AOL’s celebrity gossip site, AOL’s Bebo, several online display advertising networks like advertising.com and tacoda.com. In terms of unique users, they would effectively become larger than Google, the current industry leader.

“It’s a deal worth doing” at a reasonable price, said

Charles Di Bona, an analyst with Bernstein Research. “It would bring some search and some significant display advertising assets.” Bernstein’s parent company, Alliance Bernstein, owns shares in both Microsoft and Time Warner.AOL’s advertising business is worth somewhere around£4.4bn according to J.P. Morgan. In contrast, Bear Stearns values it at nearer £7 billion.

Tags: Buyout, Microsoft, Online advertising., Search Engines, Yahoo

This entry was posted on Thursday, July 17th, 2008 at 9:15 am and is filed under Business, Press, Search Engines, The Internet. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.