WSJ (paid sub req'd): "In turn, Google, whose technology powers the AOL search engine, would allow AOL to directly sell search ads, which appear when users type key words in queries or when the words appear in the texts of Web sites... A Google linkup would elevate AOL into something of a one-stop ad shop with wide reach across the Internet, lifting it from its current status as the third-ranked player after Yahoo Inc. and Google. AOL hopes a partnership would boost ad sales enough to make up for its drop in subscribers, and better position it to compete with Yahoo, the leading Internet portal in audience and ad sales. Time Warner would become the only media giant that can sell advertisements across nearly all media, from cable and broadcast TV to magazines to Internet computer search engines."
Financial Times (paid sub req'd): "By reaching a new five-year agreement, at least in principle, to supply search results and related advertising to AOL, Google has frozen out Microsoft's attempt to secure an AOL alliance of its own as a way to kick-start its own rival search service."
FT Lex (paid sub req'd): "it makes sense for Google and AOL to stay hitched. Although the details of the deal are murky, AOL and Google also appear set to co-operate more closely on selling advertising. In effect, it does help bolster Google's lead against Microsoft while ensuring that AOL remains linked to the sector's winner. It also gives Dick Parsons a healthy $20bn valuation for AOL, certified by Google, that he can show off to his investors. Assuming Google's decision to invest $1bn for a 5 per cent stake in AOL does not tie Time Warner's hands on future moves for its internet arm, the deal looks sensible. But it is unlikely to be groundbreaking enough to persuade Mr Parsons's critics to pack up and go home."
NY Times: "The turn of events shows just how much Google - hotter now than Netscape was nine years ago - has supplanted Microsoft as the force to be reckoned with in technology. And it raises questions about Microsoft's stated goal of becoming the leader in Internet searching, as well as about its emerging plans to offer more online services under a new brand, Windows Live."
Squash: "Right now, Microsoft is a distant third behind Google and Yahoo and, let’s face it, it’s giving up a monster start. And ultimatey, Google’s defensive AOL play may well succeed in being the move that cruels Microsoft’s chances of making big bucks out of being an online advertising intermediary. However, if Microsoft does give up on the market as a cashcow, it has a very appealing backup option. It can simply rip the guts out of the market and in doing so cut the legs out from underneath Google."
Michael Parekh: "The Google/Time Warner deal is not done until the Time Warner board votes on it this coming Wednesday. There's still an opportunity for a twist in this drama."
Ben Metcalfe: "Google have [sic] given TimeWarner $1bn and in return they have to promote AOL properties on the Google site, they have to display graphical adverts from AOL on their search results and they have to bankroll AOL’s promotion of it’s connectivity services... Ok, sure - Google are getting a percentage cut of the ad-word sales on the AOL search site, and a larger cut of these non-text adverts. But surely Google don’t actually need the income stream (especially in return for all these concessions)? If there’s one thing Google already has, it’s arguably the Internet’s strongest income stream around."
Dan Farber: "This is unwelcome news for Microsoft, which badly needs the AOL traffic to kickstart its AdCenter service, which is set to debut in the U.S. soon. Ballmer likely threw more than chairs when he heard the news this morning. It might be time to start thinking about using the $40 billion in cash to see if Yahoo wants to dance…"