AOL used to be the drag on TimeWarners stock and now everyone seems to want a piece of it. It looks like MSFT and Google are the last ones putting in bids though. This was an interesting piece of news though:
Google has generated about 11 percent of its revenue in the first half of this year from its current deal to provide search technology to AOL, but this figure overestimates the importance of the deal to the company.
Analysts said the deal only accounts for 4 percent of revenue after Google returns fees to AOL in its revenue-sharing agreement.
So it seems that Google has to give 2/3rds of the money it gets from AOL back to it in the form of fees? No wonder they wanted to get an equity stake in the company. I would hate to make 11% of my revenue from once source and then have to pay them back 7% for the privilege of letting you make that revenue in the first place.
And you can see why MSFT wants to push Google out. They can deal an 11% revenue hit to their main competitor in one shot. They could forge a deal with AOL and immediately get a revenue boost out of nowhere. It should be interesting to watch which horse in this race prevail. I think it will make the loser into the winners sworn enemy.
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