What is Google up to?

• Nov. 4, 2003

We told you last week how MSN is attempting to lure Google again by either a merger/partnership or takeover bid. What we didn't get to was the deal recently made by Google to acquire paid listings provider Sprinks from its parent company Primedia. This deal piqued my interest so I started to speculate, as I often do, as to why Google would buy a secondary (at best) pay per click engine?

So I started to look at who Sprinks supplies results to. Sprinks' distribution partners include Cnet.com, AOL Instant Messenger, Marketwatch.com, Netscape and CompuServe sites. This is quite interesting considering that AOL IM, Netscape and CompuServe are all AOL properties. So I thought, why would Google want to own the listings on these sites? They already supply results to the main AOL site through free listings and AdWords. What benefit would there be to getting these other sites? We already know that combined, all these sources (except perhaps the IM application) will drive less that 8% of a sites total traffic, so there isn't a big increase there for Google.

So a theory started to form in my head. I started to see who else AOL owns, and who of this list that Google supplies for search results. I found that other big AOL properties include Mapquest.com, ICQ, Winamp.com, and Moviefone.com. All well known internet properties with high daily traffic. Of these sites, Google supplies AdWords to Mapquest.com, and free listings to ICQ. I didn't find anything out about Winamp.com or Moviefone.com, but a quick search of the site revealed no AdWords or searchable listings that I could find on either site.

But that's not too bad for Google; they will have listings of some form on 7 of 9 large AOL properties. My next question is why? Other than making money, does Google have a plan for these sites?

A big "what if" began to form in my mind. We already know that Yahoo! and MSN are the leaders when it comes to portals. And let's face it; the portal seems to be the place to be. More and more sites are trying to become the one stop shop for the internet. All the major players are rolling out new features on almost a daily basis. And we know that Google doesn't have a portal. They have said all along that they don't want to get into the portal game, but maybe they have since changed their minds? Maybe their plan is to keep Google the way it is, and takeover AOL to get into the portal business?

It wouldn't be too difficult to do, I would imagine. Time Warner appears to be doing everything it can to distance itself from AOL, even going to so far as to remove AOL from the company banner. Could AOL be on the auction block soon? I would think so. There have been many problems with the company, from insider trading allegations, fraudulent accounting practices to shrinking customer base.

Once Time Warner settles these lawsuits, it is conceivable that they could try to dump AOL altogether. And I don't think Yahoo! or MSN would necessarily be in the market for the crippled site. While the AOL properties would be a good addition to any site, I'm not confident that MSN or Yahoo! would see it that way.

That leaves Google. If they need a portal to remain competitive, then perhaps they could bail out AOL to get their customer base AND internet properties for a sweet deal. It makes sense for Google. The way things are going, the search engine isn't going to be a money making business. Plus, if they have the IPO everyone is talking about, in the spring like has been hinted, Google owners will then be accountable to not only a board of directors, but a large base of shareholders. If Sergey Brin and Larry Page wish to retain ownership of their company, they may have to bow to the pressure of shareholders who may decide that a portal is the place to be.

Again, this is all speculation. It may not happen this way at all. But it is at least conceivable, considering how this year has been. We've had many major consolidation announcements in the last 12 months. This isn't to say that I expect anything like this to happen this year. In fact, I don't think Google has the money to make an offer at this point, but perhaps after the IPO, and Google is finished counting it's hoard, it may decide it is worth it. After all, the AOL legal problems should be settled by then, so the timing might be perfect for Google.

Rob Sullivan
Production Manager
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