Google and Microsoft Play "The Price is Right" with AOL

According to a Reuters story (via News.com): Microsoft, Google still vying for AOL: that proposals from both Microsoft and Google have been submitted to AOL to "strike an internet advertising partnership" with the company.

Julia Angwin And Kevin J. Delaney in the WSJ (sub required) write:

People familiar with the matter said that under the proposal being discussed, AOL, whose current ad partner is Google, would switch to using Microsoft's search engine, and the two companies would set up a joint venture to sell online advertising across both AOL and Microsoft's MSN portal. The services would remain under control of their respective owners, but their ads would reach many more online customers than they do now, these people said.

But Google remained in its own partnership talks with Time Warner late yesterday and still could emerge on top, these people cautioned. A sticking point so far has been its reluctance to guarantee Time Warner a minimum amount of revenue, which Microsoft has done, said one person familiar with the talks.

Reuters reports that at least another round of negotiations are likely and we might learn of a final decision by Christmas.

In other talks, Comcast Corp., which sources said was considering a joint deal with Google, is now also seeking a separate arrangement with AOL, regardless of the outcome. The top U.S. cable operator is discussing how it can market its high-speed Internet service to AOL's dwindling but still large dialup customer base, among other topics.

Micrsoft CEO, Steve Ballmer, while in DC remained quiet on any sort of deal but said:

Online advertising is of keen interest to us, and I have absolutely nothing to say about the AOL deal or (any) deal whatever," Ballmer said. "If you ask, particularly our consumer-facing businesses, what will be the most rapidly growing revenue stream at Microsoft, it's absolutely going to be advertising.