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By Elinor Mills, 17 October 2005 09:00

NEWS Yahoo! has reportedly left the sidelines and entered the struggle with rivals Google and Microsoft for a piece of AOL.

Yahoo! is in talks with AOL, according to an article on TheStreet.com, which cited unidentified sources. The prize: AOL's millions of search and portal users and the related $380m in ad revenue that now goes Google's way.

Representatives of Yahoo! and of AOL, a unit of Time Warner, declined to comment on the report. The word comes on the heels of rumours that first Microsoft, then a Google-Comcast partnership, were in discussions with AOL.

If Yahoo! is in the running, the stakes could get high.

Rob Enderle, principal analyst at the Enderle Group, said: "When you've got multiple players going after a property, like anything, you get increased competition and people tend to bid higher."

Gary Stein, an analyst at JupiterResearch, agreed.

Stein said: "It does certainly seem like everyone is interested in AOL these days, particularly because of its [large volume of] traffic. There is no clear indication that AOL is even looking to sell but now, all of a sudden, they are the most popular girl at the dance."

As far as Yahoo! joining in, Stein speculated "there is no clear reason for it, other than maybe the fact that after a couple of people become interested in this property, others look at it and say, 'I certainly don't want to see it go to a competitor'."

AOL recently had a makeover and a huge shift in its business model when it opened up its formerly walled-off content to the internet at large and launched a new AOL.com portal. The move was designed to help grab some of the free-flowing online ad dollars going toward Google and other search rivals.

Enderle said: "Part of the reason they relaunched was to create value around the property. It's been no secret that Time Warner has wanted to dump this thing since they took control over [it]."

In a shocking move that illustrated the exuberance of the era, AOL merged with Time Warner in a staggering stock transaction worth about $160bn.

For Google, Microsoft and Yahoo!, a bid for AOL is a defensive move against the others, Enderle said.

He said: "Microsoft probably has the strongest synergy with AOL, because MSN was designed [based] on the AOL model. Of the three, Yahoo! needs [AOL] the least."

Elinor Mills writes for CNET News.com