Google has agreed to purchase 5% of AOL from Time Warner. The deal puts a $20B valuation on AOL (good for TW); means that Google will prioritize AOL in search (changing the Google fair and balanced approach to search); and makes Microsoft - who thought they had the deal wrapped up now a distant 3rd in search (not good for MS).

Since Steve Ballmer doesn't normally like to lose, the new year should see MS getting seriously aggressive about combatting the war with Google.