AOL, Microsoft Reportedly in Talks

By Ed Oswald, BetaNews

September 15, 2005, 2:35 PM

Microsoft is reportedly in talks to take a large financial stake in America Online. At least two media outlets cited sources close to the two companies who confirmed that talks were occurring. However, it's not clear if the discussions extended beyond simple collaboration ideas.

The actual talk of an investment came within a bigger discussion on how the two companies could collaborate according to the Wall Street Journal and New York Post, which first reported the story.

Sources say Microsoft has suggested that the ISP use its search engine, rather than Google that it currently uses for search.

According to the WSJ, the talks have extended beyond search into a possible merger of the AOL and MSN ad sales groups. However, Reuters cited a source late Thursday morning calling the talk of a joint venture "overblown."

AOL has suffered from shrinking subscriber numbers as its core base of dial-up subscribers move to broadband. Microsoft's MSN division, on the other hand, outmaneuvered AOL in the broadband market by signing deals with several providers including Verizon and SBC.

Neither AOL nor Microsoft are commenting on the speculation.