Google Holds on to AOL’s Search Business

Having suggested it was considering multiple companies to provide search technology and search ads across its global properties, AOL has opted to renew its partnership with market leader Google until 2015. Financial terms of the deal were not disclosed.

The agreement is essentially a renewal of the one the pair initially reached back in 2002 – and subsequently renewed in 2005 – but extends to include search activity from mobile devices as well as desktops. AOL-owned video content will also be featured on Google’s video site YouTube as part of the arrangement.

“Today is another important step in the turnaround of AOL,” the company’s Chairman and CEO Tim Armstrong commented in a press release, adding, “All aspects of our partnership will be improved by this deal.”

AOL said in July that it was considering “at least three” potential search partners, suggesting it may choose to partner with Microsoft for at least some of that technology. Under the terms of the new deal, however, Google will now be its exclusive search provider for AOL’s global properties for a period of five years at least.

AOL sites accounted for around 2.3 percent of U.S. searches in July, according to comScore, and with Microsoft and Yahoo’s search alliance currently scrapping for any market share it can get its hands on, the renewal of the AOL deal will likely be seen as a victory for Google.

Google Chairman and CEO Eric Schmidt said the company is “excited” to deepen its partnership, and placed particular emphasis on the mobile and video elements of the arrangement. “It’s particularly exciting to see our relationship expand into video and mobile. These areas are now at the heart of users’ online experiences and at the core of both of our businesses,” he commented.”

Financial terms of the deal were not disclosed, but the relationship generated around $700 million a year for AOL in 2008 and 2009. The current contract expires officially in December, suggesting a deal was reached by the two companies ahead of deadline.

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