Google CEO on AOL Partnership

At the Bear Stearns media conference, CEO Eric Schmidt stated that the AOL partnership was critical to the success of Google to date and they consider AOL an extremely valuable partner. Given those statements, the CEO just brought to light one of the biggest risks in Google’s business models given that AOL represents about 15% of the companies revenues and that AOL has been extremely active in building out its search verticals, without Google I might add. The decision for AOL would center on whether the present value of the 20 cents they would gain from building and operating their own search engine is greater than the cost of operating the search engine i.e. computing power and salaries to math and engineering PhDs.