The New York Times is reporting Google the winner in the competition to catch AOL, culminating in a $1 billion deal between Richard D. Parsons, CEO of Time Warner and Eric Schmidt CEO of Google around 9pm last night.
The deal gives Google a 5% stake in AOL but also sees Google agree to giving favoured placement to AOL content on the Google site. It is also an event of seismic proportions, solidifying Google’s place as the absolute dominant search entity. It also denies MSN the premium paid- advertising entry point needed to challenge that position.
Parsons called Microsoft CEO Steve Ballmer this morning to break the news. When MSN enters the paid ad market, it will enter it way behind Google and Yahoo Search Marketing.
In the end, AOL gets a billion in the bank and some form of prominence on Google pages. Google keeps its biggest active rival off its back until the next deal comes along. We all get a lesson in irony as Microsoft gets a dose of karmic reality delivered by the owners of Netscape, a ghost from Microsoft’s past.