Ed Driscoll

AOLTimeWarnerGoogle?

AP reports that Time Warner has entered into talks with Google:

Time Warner Inc. ended talks with Microsoft Corp. Friday and entered into exclusive negotiations with Google Inc. over a $1 billion investment and a broader advertising partnership with America Online, executives close to the talks said.

Shutting out Microsoft sets the stage for a high-profile agreement between two titans of the Internet. Under the deal, expected to be announced as early as next week, Google would pay Time Warner $1 billion for a 5 percent stake in AOL, said one official with direct knowledge of Time Warner’s negotiating position.

Google, which operates the Internet’s dominant search tools, also agreed to highlight AOL’s Web properties as sponsored links and integrate AOL’s video clips in its fledgling Google Video service. In exchange, AOL will continue providing Google’s search engine to its subscribers.

Officials described the negotiations on condition of anonymity because no agreement has yet been formalized. The deal could be finalized next week, when Time Warner’s board meets in New York.

Hopefully I’ll eventually be proven wrong, but my initial impressions of this deal aren’t leaving me with a warm fuzzy feeling.