Under pressure from part-owner and legendary investor Carl Icahn, Time Warner has been in apparent negotiations with Google, Microsoft, and Yahoo in recent months of the fate of its AOL division. AOL, which has been expunged from the corporate stock symbol and name, is widely derided for the damage its past accounting practices and its association with the dot-com bubbleburst have caused the blue-blooded parent company.

Now, with a detailed agreement between Google and AOL hinging on Google acquiring 5% of the Time Warner subsidiary for $1 billion, AOl is newly re-valued at $20 billion. Early analysis shows Google the winner in this round of its battle with Microsoft over search leadership. But the story appears to be more complex than that.

AOL's "hands are tied behind its back" was the word of one industry analyst who is running counter to the early consensus that Google is a big winner in this deal and Microsofot a big loser. AOL drives 11% of Google's revenue, a scary enough thought, and the new arrangement will bind the companies closer together in developing a business out of serving highly targeted advertising of all online types to specific searches.

Google remains the search engine champion, although according to toolbar company Alexa, Yahoo remains number one in overall traffic. Microsoft lags in third place in this field, running counter to business wisdom that says a company should be either number one, number two, or the bottom feeder in any market. Number three is the second loser, apparently.

Although Google will be sitting on more than $6 billion in cash even after the AOL deal is completed, Microsoft has many times more than that available to attach whomever it cares to attack. The complexity of Redmond's proposed deal with AOL is what apparently failed the company this time out, rather than lack of resources. With the Google/AOL deal not official yet, Microsoft can be expected in any case to continue to think of ways of wresting search dominance from Google.