Ballmer Dances Around Microsoft-AOL Rumors


WASHINGTON — Microsoft CEO Steve Ballmer adamantly maintained a “no comment”
stance Wednesday morning as swirling and contradictory media rumors of a
possible Microsoft-AOL online advertising alliance followed Ballmer to
Capitol Hill.


In a question-and-answer session with several hundred Washington-area
technology executives, an effusive Ballmer laughed, danced and ducked any
question involving AOL.


“I have no comment on an AOL deal . . . or a no deal,” Ballmer said.


Reuters reported Wednesday that Google and
Microsoft are still actively battling to close a deal
with Time Warner’s AOL.


That report contradicted a Tuesday story in The Wall Street Journal
that said the deal was tipping Microsoft’s way. Wednesday morning, the paper
modified its story to indicate Google could still emerge a winner over
Microsoft for a search engine advertising deal with AOL.


“I guess you’ll have to keep reading [the papers],” Ballmer laughed.


AOL currently uses Google’s search engine and the two companies share
search-generated ad revenue. Microsoft, currently No. 3 in the search
engine wars behind Yahoo and Google, is anxious to
convince AOL to use its search engine.


Google currently realizes approximately 11 percent of its advertising
revenue through its deal with AOL.


According to The Wall Street Journal, Microsoft wants to create a
joint venture with AOL to sell online advertising through both AOL’s portal
and Microsoft’s MSN.


Using October Web traffic numbers, comScore Media Metrix, an online
market-research firm, estimates a combined AOL-MSN would have reached 140
million unique visitors, ranking it first ahead of Yahoo (122 million) and
Google (86 million).


Microsoft originally proposed to buy a stake in AOL with an eye toward
creating the world’s largest Internet company. That proposal has faded
as Time Warner courts competing offers that leave AOL in the media
conglomerate’s control.


AOL was virtually synonymous with the Internet boom of the 1990s, signing
up millions for dial-up access to e-mail and the Web. By 2000, speculation
over AOL reached its highest frenzy with Time Warner putting together a $350
billion deal to merge with AOL.


The deal, however, quickly soured amid Securities and Exchange Commission
and Department of Justice inquiries over possible accounting improprieties
underpinning the merger. Stockholder suits followed.


AOL has also struggled to hang on to its dial-up customers in the face of
competition from high-speed broadband providers.

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