Google invests $1 billion in AOL

Google is to invest $1 billion in a five per cent stake of AOL, the US web portal and internet service provider.

The alliance will create a powerful advertising partnership and will promote more AOL content to Google users.

Search advertising using Google technology will be introduced on the AOL network and display advertising will be extended on Google sites. The two sites will also collaborate on video search, instant messaging and improving the searchability of AOL content.

"Today's agreement leverages technologies from both companies to connect Google users worldwide to a wealth of new content," said Google chief executive officer Eric Schmidt.

"We've also created a simple way for AOL Marketplace advertisers to buy and place search-related advertising across the AOL network."

Microsoft had reportedly been looking into investing in AOL, but the deal between AOL and Google will prevent Microsoft developing a bigger share of the internet search market.

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