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Time Warner is fielding offers for AOL, which has grabbed the attention of MSN, Google and Yahoo. So, what does it all mean in the search engine wars?

Horse and Buggy ' AOL

In one of the great bum rushes of all time, Time Warner and AOL merged in 2000. Although it was actually AOL that purchased Time Warner, those in the search engine game snickered at the prospects of the new supposed media giant. Time Warner executives apparently failed to realize AOL was going to have major problems as surfers switched from dial-up to broadband Internet access. Well, Time Warner knows it now and is looking to sell.

As is well known, AOL has an antiquated business model since it dominates a dial-up market that is circling the proverbial drain. As DSL and cable broadband services become widespread, members are bailing on AOL at a prolific pace of millions a year. Time Warner appears to be seeking some way to get out of the loss of revenues, but who would buy a company that missed out on the evolutionary process?

Market Share

Despite the dire outlook, AOL still has tons of members. In fact, between 20 and 21 million people still use the platform. In a very smart move, AOL has also opened itself up to non-members, a move which has resulted in former subscribers continuing to use AOL.com even though they are now on broadband. These numbers represent a significant chunk of the domestic Internet search engine market.

While Yahoo has decided to try to gouge sites with Site Match instead of entering the AOL fray, MSN and Google consider it another part of their ongoing war. There are a variety of reasons for this war, foremost being Google's penchant for swiping'err, hiring executives from Microsoft. With AOL, MSN has a chance to punch back.

Google provides search results to AOL. The Google Adwords advertisements are all over AOL. Hmmm'anyone see why MSN might want AOL? If MSN were to purchase AOL, you can be assured Google would be shown the proverbial door as soon as possible.

Keep an eye on this situation because it the proverbial catch-22 situation. How much is MSN willing to pay for the short term benefits of controlling AOL while knowing it is a turkey in the long term? More so, how much can Google drive up the price MSN is willing to pay? Will Google panic and buy a chunk of AOL to stop MSN? Whatever the result, it will make for good reading.

Whether you like it or not, MSN is finally getting off the mat in the search engine games. It is launching a pay-per-click service for MSN.com, which means Overture or whatever Yahoo is calling it these days is going to lose some luster. If MSN takes the plunge on AOL, it will pick up search engine market share and become a bigger player. With software sales lagging, many think MSN is looking to the Internet as a way to generate revenues.

Let the fun begin.