Correction to This Article
A graphic in the Oct. 23 Business section about companies vying for deals with America Online incorrectly said that Google has no instant-messaging network or service. A version of such a service, called Google Talk, is available in 8"beta," or test, form.

AOL, and Other Online Keys

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By David A. Vise
Washington Post Staff Writer
Sunday, October 23, 2005

The most ferocious battle on the Internet these days is between Microsoft Corp., the incumbent software giant, and Google Inc., the extraordinarily profitable Internet search firm. It's both an epic clash over this era's new mass medium and a cool development for people who use computers, because the companies constantly try to top each other with new products, such as mapping and desktop organizers.

In the important area of Web search, Google and Internet powerhouse Yahoo Inc. are the clear leaders, and Microsoft has been looking for a fast way to catch up.

To strike a blow at Google and gain ground itself, Microsoft wants its MSN Search to replace Google as the search engine of choice on the Dulles-based America Online Internet service. AOL is Google's single biggest partner, serving tens of millions of information-hungry computer users whose searches turn into ad revenue.

Microsoft recently touched off a feeding frenzy centered on AOL by offering to buy the business from Time Warner Inc., which indicated it would only consider selling a minority stake.

Google then opened its own direct talks with Time Warner about buying a stake in America Online and expanding their long-standing relationship. And soon thereafter, Yahoo joined in the bidding for AOL.

Currently, Time Warner is in negotiations with all three. Simultaneously, Comcast Corp. is talking with Google about being its financial partner in any deal involving AOL.

There is no guarantee that a sale of part of AOL will take place, but Time Warner is under pressure to boost its stock price -- and one way of doing that is to increase the value of the America Online service.

The jockeying for AOL highlights the forces that are shaping the Internet as it matures into a utility we all depend on. What follows is a scorecard looking at some of the key areas that affect the companies' ability to grab and hold the attention of people who depend on this new medium for entertainment, research, communications and more.

Money

In today's hyper-competitive, dog-swallow-dog technology universe, cash is perhaps the most potent weapon a company can have. Unlike during the bubble years of the 1990s, when companies' soaring stock value made shares more prized than greenbacks, firms today -- mostly -- want cash money for their assets.

Microsoft is far ahead of the field, dwarfing others with its war chest of nearly $40 billion. Google and Time Warner, by comparison, are runners-up with less than $8 billion apiece.

The need for more cash could explain why Google appears to be partnering with Comcast to woo America Online, in response to Microsoft's flirtations with the Internet service provider.

Tools

As the computer increasingly becomes integral to daily life, companies are jockeying to develop the most essential tools that drive traffic to their sites. Traffic, in turn, translates into revenue, as advertisers seek the most exposure for their messages. As a result, the big players are being careful not to cede ground to their competitors.


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© 2005 The Washington Post Company

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