Looks like Microsoft lost this deal. I think this deal is actually a way for Google to start tapping into more of AOL’s userbase and content. Google can potentially gain so much more than advertisement space on AOL’s web properties. I’m thinking of AIM, AOL users, Time-Warner’s video content, etc. Incorporating Google branded software (Google toolbar, Google desktop, Firefox with Google search) in AOL cds could be another route. I’d expect to see many more Google/AOL deals in the future.

From the WSJ Article:

Time Warner Inc.’s AOL and Google Inc. have entered exclusive negotiations over a deal that would have the search giant pay $1 billion for a 5% stake in AOL, deepening their advertising partnership, according to a person close to the situation.

The talks shut out Microsoft Corp., which has been wooing AOL since January.

As part of the deal, AOL would be able to sell advertising among the search results provided by Google on AOL Web properties. AOL’s sales staff would also sell display ads across Google’s network of Web publishers.

More details at SEW and the BBC.

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