It's being widely reported that MSN and AOL are in some kind of talks, possibly merger talks, apparently based on an article first published in the New York Post.
I don't know. While I easily could imagine talks between AOL and Microsoft to get AOL to switch to using MSN Search -- AOL web search is currently layered on top of Google -- I have a hard time believing in an merger. Seems to me that mashing these two beasties together for a while will yield nothing but some pretty ugly offspring.
So, yes, on the one hand, MSNAOL (or whatever we might call this Frankenstein monster) would have a huge audience. For many casual and mainstream internet users, AOL and MSN are the web. AOL's tens of millions of users tend to play in AOL's garden. MSN captures all the newbies who don't bother or are too intimidated to change their default browser settings (since Windows is the default operating system, IE is the default browser, and MSN is the default start page).
But the name of the game in web search these days is innovation. AOL and MSN are already on the dysfunctional side of the spectrum in terms of their ability to get cool things done. Merge these two giants and the result will barely be able to control its own chaos. Forget innovation, a merged AOL and MSN would be so clumsy that it couldn't even imitate anymore.
I think Microsoft understands this. They've been working hard on MSN, trying to build a culture of innovation, even experimenting with skunkworks projects like Start.com. I doubt they'd throw that all away by spilling AOL all over it.
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The TimeWarner folks, though, might be interested in jettisoning AOL... trying to find a bigger sucker, if you will.
But I do believe your assumptions are more probable than MSN merging with AOL.
Another thought - maybe they're working on making AIM/ICQ/MSN Messenger interoperable? Just a shot in the dark...
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