This is when the fun begins. When it was revealed that Microsoft (NASDAQ:MSFT) was interested in teaming up with Time Warner's (NYSE:TWX) AOL, you just knew that Google (NASDAQ:GOOG) wasn't going to take this lying down. There was too much at stake in the lucrative paid search space for Google to give up so easily. According to Thursday's Wall Street Journal, Google is now teaming up with Comcast (NASDAQ:CMCSA) to break up AOL's negotiations with Microsoft by making a bid for a minority stake in a collection of AOL's high traffic online properties.
Dot-com catfight? You better believe it. Google's got a very good reason to bare its claws. America Online has been the best producer in Google's marketing network. AOL broadcasts Google's targeted ads throughout its properties and gets rewarded with a hefty piece of the action. Last year, AOL accounted for roughly $380 million -- or 12% -- of Google's $3.2 billion in revenue. Google, in turn, treated AOL to a thick $300 million slice -- or about 80% -- of that sum.
Owning AOL, or least owning a piece of AOL, would give Google a thicker chunk of the contextual marketing action. It would also keep Microsoft out. That's important, since Microsoft is finally getting around to offering a paid search service that will challenge Google and Yahoo! (NASDAQ:YHOO) in this fast-growing field.
So where does Comcast fit into all this? Good question. You can almost sense the negotiations going down a little something like this, re-enacted by the San Dimas High drama club:
Microsoft: Oooh, baby. I can't wait to hold you and those delicious eyeballs, my sweet AOL.
AOL: Not so fast, Mr. Softy. I haven't broken up with Google just yet.
Google (knocking): Open up, AOL. I know you're there.
AOL (opening door): Man, this is like totally awkward.
Google: Don't leave me, sugar.
AOL: Well? Hey! Who brought that Comcast kid here?
Google: Don't worry, darling. He's cool. He's with me.
AOL: Give me one good reason why I shouldn't leave you?
Google: Haven't I been good to you, cupcake?
AOL: Yes, but --
Google: Microsoft's a stranger, pookie. He's inexperienced. You don't know what you're going to get if you run off with him. You know that, don't you?
AOL: Yes, but my parent wants me out of the house.
Google: TW wants you out, but think about the clicks. We had something great, doll.
Microsoft (coughs): Ahem, AOL? Will you marry me?
Google: Comcast? The ring please?
No. Comcast isn't just the ring boy. It's also a content and marketing titan. One would also think that Comcast wouldn't mind converting the 20 million AOL dial-up subscribers to its broadband connections, though apparently America Online's flagship service itself is not part of the deal.
That's why Comcast may be an odd wingman for Google, especially with Google looking to devalue Comcast's broadband business by proposing to blanket pockets of the country with free ad-supported Wi-Fi access.
In fact, don't be surprised if there's another knock at the door and it's Yahoo! on bended knee. Like I said earlier, the fun is only beginning. Pass the popcorn, but if the bidding war heats up don't pass up on shares of Time Warner.
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Longtime Fool contributor Rick Munarriz knows that there is no such school as San Dimas High in California. It's a tribute to Bill & Ted's Excellent Adventure and alt-rockers The Ataris. He does not own shares in any of the stocks mentioned in this story.The Fool has a disclosure policy. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
