MSN-AOL merger on the cards

MSN-AOL merger on the cards

Summary: Dominating the tech.memeorandum front page today (it's become my daily newspaper), was the story going round that either Microsoft or Google is going to buy AOL.

SHARE:
TOPICS: Google
15

Dominating the tech.memeorandum front page today (it's become my daily newspaper), was the story going round that either Microsoft or Google is going to buy AOL. It started with the New York Post reporting that AOL is in talks to sell a stake to Microsoft. According to NY Post sources, Microsoft is planning to combine AOL with its own Internet unit MSN. PaidContent.org was initially skeptical of the news, saying it "could be something big, could be nothing at all." Later PaidContent.org reported, via the WSJ, that the talks revolved around Microsoft taking a stake in AOL "as part of a broader discussion about the two companies working together." So it may not be an acquisition at all, just a working relationship. 

There's also talk that Microsoft wants to buy AOL to put a stop to one of Google's income streams - AOL uses Google search. Of course, there's no love lost between Microsoft and Google. The NY Times put forth a number of scenarios, including MSN and AOL combining to create the world's largest Internet portal - currently Yahoo's position. So whichever way it goes, there are significant risks to both Google and Yahoo if an MSN-AOL deal proceeds.

Google just yesterday raised $4.18 billion in a stock sale to fund expansion. So they have the funds to purchase AOL. And Yahoo! may yet turn out to be a suitor for AOL, as a strategic move to prevent Google or Microsoft acquiring AOL. This is all speculation, but then so was the eBay-Skype deal until recently!

Russell Beattie thinks Google is the most obvious candidate to buy AOL, in order to expand its online media business past just search. Russell mentioned the following AOL assets which he thinks Google could do with: "the Netscape name (and campus down the street from Google in Mt. View), AIM, AOL Mail, AOL Mobile, multimedia assets, tons of content and tons of community services as well." In Russell's comments, Danny Sullivan disagreed that Google is the likely buyer. He thinks the MSN deal makes more sense "from a search perspective."

Susan Mernit thinks Google is the likely candidate. She wrote: "AOL has built a terrific server network and infrastructure/backbone over the years, and that would be a strong asset for Google--as would be the millions of pages they could monetize directly." That's a compelling argument - and Susan should know, having been an AOL executive in a previous life. Her final comment: "Side note to Google execs: Don't do it, you have no idea what you would be getting into!"

This is an intriguing story. Most paths point to MSN and AOL doing some kind of deal, but we may yet see the eBay-Skype deal trumped with an outright purchase of AOL by one of The Big 3. If that happens, we'll be back in dot com bubble land. So I'm kind of hoping it's not that big a deal.

Topic: Google

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

15 comments
Log in or register to join the discussion
  • ???????????????????????????????

    Who the heck would want AOL? This would be like investing in SBC (POTS) because its a bargin because of VoIP. Did you know that dial-up doesn't work through VoIP? If you pay for broadband (Cable, DSL), why would you pay ADDITIONAL to get AOL? For what? THIS IS INSANITY!
    Roger Ramjet
    • Huh?

      "Did you know that dial-up doesn't work through VoIP?"

      That doesn't even make sense. To have VoIP, you need internet access in the first place! So if you already have internet, what would you do with dial-up?

      Did you actually mean VoIP won't work through dial-up? That doesn't make sense either, because if you're using dial-up, you already have a phone line so why do you need VoIP?

      Anyway, this is like Yahoo!'s deal with SBC. SBC is an ISP, Yahoo! is a content provider.
      java.user
  • AOL - Time Warner

    Whats the deal with AOL-Time Warner
    mozart_z
  • When you combine two products that suck

    I wonder what you get? Success or just one product that sucks even more so?
    duclod
  • Hopefully Microsoft will buy AOL

    And then AOL can do to Microsoft what it did to Time Warner. Yay!

    :-)
    Jeff Spicoli
    • Oh Jeff, don't you see the irony???

      First of all, AOL will be selling for tenths of cents on the dollar as compared to the Time Warner sale - whomever buys AOL - this is distressed fire salvage bottom of the barrel sale.

      But the true - real fun irony - is Ballmer and Gates gets to have Netscape all to their own.
      quietLee
      • AOL bought Time Warner

        AOL bought Time Warner using it's highly inflated stock. That was the big news at the time, "new media" (internet) was buying "old media" (newspaper, magazines, etc).
        java.user
      • Part of the reason it will not happen

        For Microsoft to control IE, AOL browser and Netscape would be too much. There would be little room for competing browsers as Microsoft would control three of the most widely used ones. Regulators in th US and the European Union would not allow it. The two companies would have to sell off some of their assets pre-merger to make sure that the merged Microsoft-AOL entity does not end up essentially owning the internet by controlling all the browsers and ISPs (MSN, AOL, NEtscape ISP) plus a great deal of the technologies that make the internet possible.
        animekenji
  • It's a certainty the Time Warner guys would like to see it go.

    Was a bad marriage that didn't have much of a chance.
    No_Ax_to_Grind
    • Not 'zactly

      Truth be told - AOL is finally making money for Time-Warner. Just not thru subscriptions - that mess has finally finished.

      And it looks like it would be more a joint venture between MS and Time Warner - with benefits to both.

      Time Warner gets out of the tech area - they finally get to get rid of Netscape. MSN turns the AOL search to MS - generates revenue for MSN and kills revenue for Google - there is a big win there. And Messenger merges with AIM - with even more revenue to be generated with all the advertising.

      Finally, of course, Gates and Ballmer get the last laugh, as they put in the final bit of the boot into Netscape (not Mozilla, but what's in a name).
      quietLee
  • AOL is sitting on untapped gold

    AOL could turn itself around in two easy steps but they have been blind to its explosive potential.

    First, AOL needs to make the client free for broadband users. It'll stop the bleeding and perhaps increase its number of users. This will allow them to justify their ad rates and most likely grow the stream if the "eyeball" count goes up.

    Second, it needs to make it the premier place to get access to its MASSIVE library of content. They've got classic boxing matches, Wimbledon, Sopranos, Six Feet Under and all of its other great shows past and present. While the client may be free, they can charge fees for downloading past shows. Would I pay $2-4 to watch that episode of 'Six Feet Under' I missed? Happily. Would I pay $20 to have access to a whole back season? YOU BET! So it canibalizes DVD sales, WHO CARES IF YOU'RE SELLING 10 TIMES THE AMOUNT WITH NO PACKAGING AND DISTRIBUTION OVERHEAD?!?!?!

    With AOL sat cowering in fear over whether or not I would pirate something that I would have gladly paid for, I was FORCED (yes, FORCED) to download recent missed episodes of 'Six Feet Under' from bittorrent. Why do I feel ZERO guilt? Because IT WAS NOT AVAILABLE FROM **ANY** OTHER SOURCE.

    Too bad Ichan is an old fogey because someone there needs to have the BALLS to make a bold move and get the ball rolling on this virtual goldmine they're sitting on.
    frankz00
  • You want irony....

    MS will/has inked a deal with AOL, replacing Google search with MSN. Google buys them (they can have them) and finds it must honor contract with MSN. So either
    a) The Google company forced to use MSN search (great PR).
    b) Google pays MS LOTS of money to buy out contract and stuck with money losing entity (AOL).
    John Zern
  • Buying AOL doesn't make much sense...

    ... for Microsoft. They know as well as AOL does that the dial-up business is dying; that's AOL's big problem. Both AOL and Microsoft are trying to make money with services to broadband users. That is, have a broadband supplier and get content from AOL or MSN.

    But AOL does have some things Microsoft could use, such as access to the AIM users. Remember AOL prevented that years ago. An agreement, more an accommodation, could help both parties.

    Another irony to the list: Microsoft offered to buy AOL a long time ago, when AOL was small. Fun to speculate that Microsoft buys (AOL) Time Warner at its depressed stock price, then immediately spins off Time Warner. Probably make a profit, which they couldn't do, likely, if they bought only AOL.
    Anton Philidor
  • AOL-MSN Merger...Oh Brother

    Yes, let's bring more 60+ year old users who like to send their viruses around and get ripped off from scam e-mails into the IT world and make our lives sooooo much easier.
    itanalyst
  • It would never be allowed

    AOL and Microsoft will NEVER be allowed to merge as is. Microsoft would control Internet Explorer, AOL browser and Netscape, which would give them a virtual monopoly on the browser market. They would also own MSN, AOL, and Netscape internet access. This would give them too large a portion of the ISP market for other companies to be competitive. THere also other technologies owned by Microsoft and AOL that overlap in key areas which would destroy competition if a merger were allowed to happen unimpeded.
    animekenji