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Google Reportedly Offering To Take A $1 Billion Stake In AOL: Page 2 of 3

Microsoft had been trying to displace Google as AOL's Web search provider, and to create a joint advertising sales unit that would sell ads across the AOL and Microsoft MSN networks. Yahoo had also talked with AOL, but broke off negotiations in November.

Ken Cassar, an analyst with Nielsen/NetRatings, said a deal between Google and AOL would "shake up the search/portal space."

"For advertisers, it allows them to buy comprehensive packages that cut across the different forms of advertising, including search, display and contextually relevant links," Cassar said in an email. "In addition, now AOL's sales force has the ability to sell a wider array of online advertising."

In addition, the agreement would set "a major milestone in the escalating war between MSN and Google," the analyst said.

Microsoft has moved aggressively into the multi-billion-dollar online advertising market, and has named Google its top rival. Online advertising this year is expected to exceed $12 billion, substantially higher than last year's record of $9.6 billion, according to the Interactive Advertising Board, an industry trade group.