The WSJ (subscription required) has gathered that Microsoft and AOL are close to reaching an agreement on an online advertising service designed to compete with Google. Under the agreement, AOL would use Microsoft’s MSN service and drop Google as its provider of Internet search.
Currently, AOL has a fairly typical relationship with Google: AOL customers generate advertising revenue for Google and the two companies share the revenue. Last year alone, AOL took home $300 million in revenue from the deal. The contract between Google and AOL runs well into 2006, though Microsoft is anxious and preparing negotiations now.
This isn’t chump change for Google either. Some sources say that 11 percent of Google’s revenue is generated from AOL. Thus, Microsoft is trying to offer something unique to AOL as part of the coaxing process: some sort of joint advertising sales force to sell online ads across both AOL and Microsoft’s MSN. More information is expected the third week of December.
This is just further information suggesting that the tension between Microsoft and Google is rising.
