SEATTLE - Microsoft Corp. and Time Warner Inc. have been discussing potential online partnerships that would help the two companies better compete against rivals Google Inc. and Yahoo Inc. (Nasdaq:YHOO - news), two people familiar with the talks said Thursday.
They two said the discussions have been going on for months and that any possible deal is not imminent.
Microsoft and AOL — who just two years ago settled a bitter antitrust lawsuit over Microsoft's tactics in the Internet browser market — are discussing possible collaboration in search technology, online advertising and instant messaging, said the two sources, one of whom is an executive with Time Warner's America Online unit.
The other source, who works closely with Microsoft and has been involved in company discussions on the possible partnership, said the talks have heated up in the last couple weeks but are not advanced.
Both sources spoke on condition of anonymity.
Time Warner spokeswoman Susan Duffy and Microsoft spokesman Jim Desler declined to comment on the talks, which were first reported in Thursday's editions of the New York Post.
The AOL executive said one aspect of the talks originally centered on using Microsoft's new MSN search engine on AOL, replacing AOL's current relationship with Google.
More recently, the executive said, the two companies have been talking about the possibility of deeper relationships, such as collaborating in the lucrative market of selling advertising online.
Such a collaboration could allow the two companies to benefit from growing interest in search-based advertising, helping them better compete against search leaders Google and Yahoo.
But, the executive said, "the discussions are not advanced."
The person familiar with Microsoft's thinking said the company's MSN unit has always been interested in striking a deal that would allow it to benefit from AOL's market-leading instant messenger program.
AOL's instant-messaging product, AIM, had more than 53 million unique users in August compared to about 29 million for the competing MSN Messenger, according to Nielsen/NetRatings.
Time Warner shares rose 58 cents, or 3.2 percent, to close at $18.50 Thursday on the New York Stock Exchange. Microsoft shares were down 4 cents to close at $26.27 on the Nasdaq Stock Market.
Shares of Time Warner have traded between $15.82 and $19.90 in the past 52 weeks. Shares of Microsoft have traded between $23.82 and $30.20 during the same period.
Redmond-based Microsoft and Time Warner's AOL unit have clashed in the past.
In the spring of 2003, Microsoft aGREed to pay Time Warner $750 million to settle an antitrust suit over charges it used strong-arm tactics to make Internet Explorer the dominant Web browser, displacing AOL's Netscape.
