Will Google and AOL part ways?

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Brian and team, who work for a digital marketing agency run this Digital Crosstalk blog.
Occasionally we might blog about companies and people we work with but for the most part we'll simply be blogging about stories and events which we find interesting.

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Will Google and AOL part ways?

Posted by Brian | Filed under blogging

Back in 2005, when things were a little rosier for AOL, Google decided to invest $1 billion for a 5% stake in AOL. Sadly AOL just didn’t perform like Google wanted.

When Google bought their stake in AOL, it effectively valued AOL at around $20 billion. Last month Google put a figure on that investment of just $726 million making AOL worth roughly $5.5 billion.

Last week Google sent a request to AOL to exercise the “demand registration statement” on its stake in AOL.

When Google invested, it included a clause which stated that Google had the right to force Time Warner to take AOL public or buy AOL’s stake back.

The timing couldn’t have been worse for owners Time Warner, who just posted a $16 billion loss in the 4th quarter.

But is Google really looking to end the deal completely?

One popular theory floating around the blogosphere is that Google is simply looking for a better deal. By simply asking for a massive refund in the midst of Time Warner’s recent financial postings about AOL’s performance, Google put themselves in a clever position for negotiating.

It’s unlikely that either Google or Time Warner think it’s a good idea to float the AOL stock, so in essence Google is simply calling in the tab. Which leaves us with two options, either Google is trying to get a better search services deal from AOL or simply trying to get as far away from the struggling web company as possible.

While Google has said that it wants to continue working with AOL, only time will tell whether these two companies will part ways.