Online search titan Google is investing one billion dollars to take a five-percent stake in Time Warner's America Online unit as part of a major strategic alliance, the companies announced Tuesday.
They said the agreement, which shuts out software giant Microsoft from a rumoured AOL tie-up, will create a global online advertising partnership and make more of AOL's content available to Google users.
The deal confirms a years-old relationship between AOL and Google, a Silicon Valley company dependent on online advertising revenue, said analyst Rob Helm of the independent research firm Directions on Microsoft.
Google was "protecting its Achilles' heel while Microsoft was poking at it" by chipping away at its arch-rival's revenue stream, Helm told AFP. The companies said they would explore giving an international reach to AOL Marketplace, a popular classified ads section of AOL's US portal.