A proposed $1bn deal between search engine Google and internet portal AOL could significantly damage the reputation of Google as an objective search engine. The deal will see AOL content receive preferential ranking with Google search results in return for a stake in AOL.
The new deal will see Google provide AOL with search technology and replaces an existing marketing deal between the two companies, the Financial Times reports today. Google currently earns 10% if its revenues from advertisements placed on AOL, according to the newspaper, which also claims that the Google is to provide AOL with " technical assistance" in return for AOL content receiving improved ranking status in Google search results.
Google and AOL are also to jointly develop a new video search service. AOL has a considerable video library which is likely to be indexed by Google.
Providing AOL content with an improved ranking could damage the strong reputation Google has an objective search engine. A reputation that has enabled Google to become powerful in the library, information and publishing sectors with tools like Google Book Search and Scholar. The FT claims AOL content will carry the company logo. Some bloggers are angry, calling the deal an " unholy pact"; others see it as no different to boxed out paid for results currently a feature in Google search results.
By paying $1bn for a 5% stake in AOL, Google may be just planning its financial future. Search author and blogger John Battelle who recently penned The Search, an analysis of how search technology has dramatically changed business and culture, believes the deal will make $2bn for Google if AOL is floated on the stock market.
"The company [Google] knows that by guaranteeing its business to AOL for the foreseeable future, it has in essence guaranteed AOL's bottom line," he states on his Searchblog. "Will AOL be taken public? My conversations with AOL execs lead me to believe the answer is yes," he said. AOL is currently part of the TimeWarner publishing empire, famous for Time magazine and owner of UK magazine publishers IPC .
A deal between Google and AOL will be bad news for software giants Microsoft which was also reportedly chasing an alliance with AOL to bolster its MSN web search service. Microsoft recently joined forces with search rival Yahoo to collaborate on book digitisation.
