Time Warner has ended talks with Microsoft and entered into exclusive negotiations with Google over a $1 billion investment and a broader advertising partnership with AOL, executives close to the talks said, an Associated Press report said.
Shutting out Microsoft sets the stage for a high-profile agreement between two titans of the Internet, the report said.
The report said under the deal, Google would get a 5% stake in AOL, implying a $20 billion value for the unit, said one official with direct knowledge of Time Warner's negotiating position.
Google, which operates the Internet's dominant search tools, also agreed to highlight AOL's Web properties as sponsored links and integrate AOL's video clips in its fledgling Google Video service, the report said.
In exchange, AOL will continue providing Google's search engine to its subscribers.