Next Up: MapQuest ‘Powered by Bing’?

I was having a discussion with some people last night in a bar in San Francisco (where I do all my best thinking) and I was pointed to a provocative statement buried in a post about AOL CEO Tim Armstrong’s recent UBS conference keynote. It’s from Peter Kafka at AllThingsD:

Q: Whither MapQuest?

A: MapQuest is still Top 20 search term. It has a large market share. The technology has not been focused on in a number of years. We’re changing that. Partners are inquiring about MapQuest, and I think what we’ll do is an operational partnership with them. We feel like its a “very, very valuable property.”

What we discussed was that, as a practical matter, this probably means Bing Maps will come in to “power” MapQuest the site. So rather than sell the property as was previously rumored, AOL will retain the brand and the traffic and outsource the back-end technology, as Yahoo is doing with search, to Microsoft.

What that also likely means, by extension, is that Microsoft will become AOL’s search and search monetization partner when the Google deal expires in 2010.

Who thinks I’m wrong?