FIRST Microsoft expressed interest in buying into AOL, the internet division of Time Warner, and now Google and Comcast have taken a shine to the world’s biggest internet service provider. Suddenly, the faded dot-com star is suddenly back on everybody’s Christmas list.

Google, the internet search company that is opening up fresh fronts with Microsoft on a daily basis, has partnered with Comcast, America’s largest pay- TV company, in approaching Time Warner with a proposal to buy a stake in AOL. Such a deal could be worth as much as $5 billion (£2.8 billion), sources have said.

The latest episode in AOL’s relatively short history, which includes merging with Time Warner in a record-breaking $200 billion deal, comes just weeks after it emerged that Microsoft was interested in an alliance with its MSN division. That deal could also involve Microsoft buying a part of AOL.

An investment between AOL and Google would challenge internet groups such as Yahoo! and Microsoft by bringing together the most popular web- search service with the world’s largest internet access provider.

For Google, a deal with AOL would help to defend its position through access to 73 million people who use AOL content each month. Although AOL has lost subscribers, it has invested heavily in its broadband service.

Comcast, with 21.5 million cable subscribers and more than 7.7 million high-speed internet customers, is seeking to boost its internet offering.

Time Warner appears to be interested in all possibilities for AOL, but does not appear to be in a hurry to strike a deal. Dick Parsons, the chairman, described the latest developments merely as “market rumours”.

Comcast and Google are thought to have made a speculative approach to Time Warner regarding AOL last month after it emerged that the media conglomerate was in talks with Microsoft.

Under one proposal that is understood to have been mooted, Google and Comcast would buy as much as 50 per cent of the AOL web portal and content business, which they are said to value at about $10 billion, while Time Warner would retain operational control.

But Time Warner is thought to have put a higher valuation on AOL. The conglomerate is also under pressure to increase its returns to investors and boost its flagging share price.

Microsoft has also found itself under pressure to respond to the challenges laid down by Google, which has swiftly overtaken MSN as the pre-eminent search engine on the web and recently said it would promote Sun Microsystems’ OpenOffice, a free rival to Microsoft’s Office suite of products. Google has also moved into internet telephony, free e-mail and desktop searches, further threatening Microsoft’s dominance.

For Microsoft, an alliance with AOL would provide a huge boost for MSN, through potential cost savings and enhanced services.

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