AOL in Talks With Multiple Providers for Search Deal

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AOL is currently in talks with at least three companies regarding the provision of search technology on its sites, according its CEO Tim Armstrong. The firm's current search deal with Google, worth around $700 million for the past two years, is set to expire in December.

Speaking at the Fortune Brainstorm Tech conference in Aspen, Armstrong said there were more than two contenders in the race for the contract, stating, "Search is heating up from a multi-partner space - we are not talking to two companies," Fortune reported. An AOL spokesperson said the company would not comment on whether those negotiations are likely to result in an exclusive search provider, or whether it may attempt to pursue relationships with multiple partners.

AOL's current relationship with Google will expire on December 19th, leaving the company open to discussions with other providers, most likely Microsoft. Since Google is a known quantity, it's in AOL's interests to eseither partner with the company again or to ensure it negotiates substantially more favorable terms with another provider to compensate for lower performance.

A relationship with AOL would give Microsoft a combined Bing, Yahoo and AOL search alliance with a combined market share well over 30 percent of searches, according to comScore, granting the entity further scale. Microsoft and Yahoo have frequently expressed the benefits afforded by such scale, and the importance it plays in improving the strength of their product for both consumers and advertisers. From AOL's perspective, perhaps 30 percent is enough to challenge the type of return it's been receiving from its existing Google partnership.

Another possible scenario is that AOL will choose different partners for different aspects of its search offering. For example it may opt for Google or Microsoft to handle the bulk, while partnering with a niche provider for specific verticals or purposes, such as local. Mobile is also a consideration, given that Yahoo's mobile search product was omitted from its deal with Microsoft, and that it has continued to strike partnerships with mobile handset manufacturers and publishers. In April, for example, it announced a partnership to pre-load its search application, among others, on millions of Samsung devices, including those running Google's Android operating system.