Conspiracy Theories And AOL

    August 18, 2006
    WebProNews Staff

AOL has made a few missteps in the past few months, with its ill-advised posting of millions of search queries to the Internet discovered on the eve of the biggest search engine conference of the year; one reader has suggested issues like these are not only self-inflicted, but intentionally so.

I guess I deserved it. Make one reference to the Illuminati and someone out there has a conspiracy to share.

It’s Friday, so why not indulge in a little free thinking? I caution the reader that this piece will be an expression of opinion that has more in common with Donald Sutherland’s chat with Kevin Costner in JFK than anything else. However, I’ve learned over the years that sometimes, the oddest things can come true.

It started, as most things do online, during a chat session, where the topic of AOL somehow arose out of a conversation about web browsers. Said my source: “y’know it’s oliver stone level conspiracy theory…. but i almost getthe idea lately that aol is about half TRYING to wreck themselves.”

(Yes I know, brutal to read, isn’t it? Sometimes the truthiness can be ugly.)

I replied that it certainly looked like self-destructive behavior, but my tipster was insistent there was More To This:

Tip: more like the thoroughbred owner and the 'freak accident' stable fire
me: Yeah, but where's the insurance policy for AOL?
Tip: thats what i cant figure
Tip: time warner would happily be rid of aol though
Tip: and google is around to pick the carcass clean
Tip: it's mulder and sculley i know

(Thank you, I know it’s spelled ‘Scully’.)

I was ready to put an end to this by claiming permanent sanity, but then my tipster dropped offline abruptly. Naturally my first hope was that the elite ninja death squad had stopped by Tip’s place for tea and swordplay.

In thinking about AOL, a couple of things that have happened over the past few months besides the astonishing revelation of a treasure trove of user search data popping up on the net occurred to me.

The company launched AIM Phoneline a few months back. It’s advertised as a free incoming phone number with voicemail to those who sign up. Since May, it had displayed a “Due to popular demand” message that the service is unavailable in WebProNews land. Now it just says the service is “currently unavailable” here, no mention of popularity. Oh well.

The really big news, pre-search data ‘oopsie’, came from AOL’s board agreeing to allow AOL to be completely open to broadband Internet users. Cost savings would come from job cuts. AOL may have to find as much as $2 billion between those cuts and the influx of advertising revenue they need to sustain the model.

It’s a risky play, and comes barely two years ahead of the opportunity for Google, a $1 billion investor in AOL, to recoup its investment. As part of the deal, Google can require the holding company with the AOL rights to register them for an initial public offering.

Time Warner would have to pay Google the fair-market value of AOL at some point starting or after July 1, 2008, or risk having AOL sold off to satisfy the agreement.

Would Time Warner intentionally tank AOL, just to drive down its value and pay Google a much smaller price than might otherwise be necessary to retain it? It could take a couple of years to make back that $2 billion it anticipates dropping with the shift to broadband availability.

That would be just in time to avoid the forced spinoff. Profitability from online advertising and a leaner cost structure look like a better bet than sabotaging AOL from within just to have a cheaper price to pay Google in 2008.

I hope old Tip is ok.


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David Utter is a staff writer for WebProNews covering technology and business.