AOL signs 5-year search agreement with Google

The agreement largely reinforces an arrangement that has been in place between the two companies since 2005. But the new contract, announced Thursday, also expands their cooperation onto AOL sites for cell phones and other gadgets. And it will put AOL video content on Google Inc.'s YouTube site for the first time.

In its search agreement, AOL shares revenue with Google from the text ads that appear alongside search results.

AOL shares rose 12 cents, or 0.5 percent, to US$23.02 in morning trading Thursday, while Google rose US$2.27, or 0.5 percent, to US$462.60. Shares of Microsoft Corp., one of Google's main rivals in search, were unchanged at US$23.90.

AOL, which is based in New York, is led by former Google executive Tim Armstrong, who is in the midst of a major overhaul at the Web company. The company split from Time Warner Inc. last year and has been trying to grow its online ad business as its dial-up Internet service continues to lose customers to faster broadband connections.

That effort is not proving easy. Last month AOL reported a roughly US$1 billion loss for the second quarter, with revenue down by more than a quarter compared with the year before.

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