Dear Time Warner: Cut AOL loose or count us out. Love, Google.

Now, this is kind of a big deal, since Google does own a 5% share of the erstwhile giant of ISPs. Google bought that share with $1B back in December 2005, beating out Microsoft in a bidding war that brought AOLs valuation to the needed $20B"and it looked like a major blow to Microsoft. (Though you can probably guess who might be laughing now.)

The three-year deal matured last year, with July 1 as the first day Google could opt out of AOL. Instead of opting out, they wrote down $726M of their investment in AOL in Q4 2008.

But this week, the tune sounds a little different. With the nearly 75% write-down, Google apparently places AOLs total value at about $5.4B. With the clauses from their original agreement, Google is now holding Time Warner between a rock and a hard place, forcing them to either buy themselves out of their deal or spin AOL off into its own public company. Less likely, a larger deal could also free Time Warner from this obligation.

But would going public really be any better for AOL than being part of Time Warner? With 5% of the company in its portfolio, perhaps Google could hold a controlling interest. Or perhaps Google is hoping to acquire more of the company at market value these days. Or maybe theyre simply hoping to unload their shares on the general market.

What do you think? Why does Google want AOL public"or are they hoping Time Warner will balk, and pay them out of the contract?

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