Report: AOL in talks to acquire Red Hat

AOL Time Warner Inc. (AOLTW) is in talks over a potential acquisition of Red Hat Inc., a major distributor of the open-source Linux operating system, The Washington Post reported Saturday.

The negotiations "are still fluid," the paper said, citing sources familiar with the matter. AOLTW subsidiary America Online Inc. (AOL) is said to be interested in Linux as a possible alternative to the dominant Windows operating systems of its archrival Microsoft Corp.

Officials at AOL, Red Hat, and Microsoft could not be immediately reached. The Post said the companies had declined to comment.

AOL has feuded with Microsoft in the past over issues such as the tie-in between AOL's proprietary Internet software and Microsoft's Internet Explorer Web browser. AOL revamped its own Netscape browser last year, amid reports that it might drop its partnership with Microsoft and use Netscape instead.

AOL on users' PCs currently runs on Windows, but could be configured to bypass the Microsoft operating system and run on Red Hat's Linux instead, sources told the Post.

A competitor of Red Hat in the marketing of Linux, Germany's SuSE Linux AG, said large corporations have been increasingly open to the alternative operating system.

"In the last half year we've seen a marked growth in interest from large companies, but only from the user side -- that they want to use Linux in their own systems," said spokesman Christian Egle. "From the financial side, we had an investment recently from the fund iMillennium (Capital Management, Inc.), which includes big companies -- (business software maker) SAP AG, Deutsche Bank AG, (consulting and software company) Accenture (Ltd.), and La Caixa (La Caja de Ahorros y Pensiones de Barcelona SA), a big Spanish bank. So there's already an interest from key market players."

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