Time Warner Board OK’s Google’s 5% Stake in AOL

NEW YORK -- Time Warner's board on Tuesday formally approved one of the most highly anticipated deals on the Internet: Search giant Google will become a shareholder in Time Warner's AOL unit. Google will pay $1 billion for a 5% stake in AOL. The deal expands a service alliance that began three years ago -- Google supplies behind-the-scenes search services for AOL -- to include greater cooperation in ad sales.

The pact bolsters AOL's position in the fast-growing online ad business as the company moves away from its subscription model to an advertising-based strategy. "By strengthening our relationship with Google and collaborating with them to drive more revenue to both companies, it will provide more solutions to advertisers," Time Warner CEO Dick Parsons said Tuesday.

Many of the expected terms of the deal -- such as cross-promotions between the two sites, as well as collaboration on video technology -- were confirmed with the announcement Tuesday night. New details include the possibility that users of AOL's market-leading instant-messaging service could also chat with users of Google's fledgling Google Talk.

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