AOL-Google Deal Appears Close

Despite reports that Microsoft (MSFT) was the front-runner to land a partnership deal with AOL, the Wall Street Journal is now saying that Time Warner is in exclusive talks with long-time partner, Google (GOOG), and a deal could be finalized as early as next week.

This news is not surprising to me. If you were running AOL and wanted to make a deal to maximize the potential for you to regain relevancy in the Internet world, who would you partner with? You’d be crazy not to go with Google at this point in time, especially since Google and AOL have already been working together for years.

The market likely won’t boost Google shares very much, if at all, on this news (especially if the financial terms look generous given many people have valued AOL at zero) but I think this is a big deal for Google and will generate meaningful incremental revenue for years to come.