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Google, AOL nail down partnership details

Including aquisition of five percent stake

Google has finalised the details of its expanded partnership with Time Warner's AOL subsidiary, including the acquisition of a 5 percent stake in AOL for $1bn (about £575m), Google said yesterday in a filing with the US SEC (Securities and Exchange Commission).

The partnership's definitive agreements, which also include a series of commercial arrangements, were signed on Friday 24 March, and the investment will close in the second quarter of this year, Google said.

For months last year, AOL toyed with the idea of ending its years-long technology and advertising partnership with Google and seeking better terms with a competitor, showing particular interest in Microsoft and its MSN internet unit. But in December, AOL finally decided to extend for five years its use of Google's search engine to power its general web search service. It also decided to keep carrying paid search ads that Google sells to advertisers, from which AOL gets a commission.

The centrepiece of the expanded partnership is the stake Google agreed to take in AOL, but other parts of the agreement are also significant, such as Google's declared intention to explore, with AOL's help, the market for graphical online ads, into which it has until now only reluctantly dipped its toes.

In previous statements and SEC filings, Google has also disclosed that the agreement calls for the companies to link their respective instant-messaging services and for AOL to assist Google with its video search service.

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