Microsoft and Time Warner are exploring whether to merge their respective MSN and AOL internet portals to take on Google.
Microsoft recently launched its MSN Search facility, which could replace the Google service that is currently used by the AOL portal. Any eventual combination of the businesses is expected to see shared ownership between the pair.
The dial-up internet businesses of both MSN and AOL are shrinking, as more users subscribe to broadband connections to the internet. The most important earner for both companies now is advertising, with sponsored internet search revenues being the segment showing the most growth, particularly using Google.
Microsoft also realises that Google could increasingly impact on its desktop software revenues, after the launch of its high capacity Gmail messaging service, desktop search facility and other features that come with its portal.
It therefore needs to increase internet search revenues to help make up any decreases in basic desktop software sales.
An alliance with AOL would give Microsoft an even greater marketing reach among internet users and place it just behind Yahoo in the search market, although Google would still comfortably be number one.