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.