Google, AOL Cement Advertising Partnership - A Lost Opportunity?
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There are some analysts who argue that Time Warner would have been wiser to pair up with Microsoft than Google. The same analyst who mentioned that AOL knows how to program content pointed out that “Microsoft has great technology and knows how to distribute content. Put the two together and it’s potentially [a] powerful set of online services. They may have missed a great opportunity here.”
For the reasons mentioned above, though, Google wasn’t going to let AOL walk into Microsoft’s hands. One analyst argued that the current agreement merely expands the one that Google already has with AOL, simply making it costlier for the search engine giant. That may be true, but it would have been far costlier for Google if AOL had signed a deal with Microsoft. First, Google would lose ten percent of its income; then, as Microsoft and AOL started working together, it would lose market share in the growing, cutthroat field of search engine advertising – which, let us not forget, is where Google earns 99 percent of its revenue.
The loss might force Microsoft to reflect on its strategy. Since the company still gains most of its income from its software, it might have thought that it could afford to lose this battle (though, according to all reports, it did work hard to try to get a deal). Indeed, it’s even possible that this deal truly was something that merely would have been nice for Microsoft, as opposed to how important it was for Google. But in the long run, that kind of thinking will lose it market share in the future – at least currently, there really isn’t any monopoly on search engines. And Microsoft is already starting out behind.
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