Fool.com: Microsoft, America Online Battle Over Instant Messaging (News) August 6, 1999

Instant Mess

August 6, 1999

One of the wonderful things about e-mail is that it doesn't matter who's sending and who's receiving. America Online (NYSE: AOL) to Lycos' (Nasdaq: LCOS) HotBot to Yahoo! (Nasdaq: YHOO) to Microsoft's (Nasdaq: MSFT) Hotmail to Chickmail: it doesn't make a whit of difference. The e-mail, as the Pony Express might have said, must go through, and it does.

It's not the same with the equally indispensable, if somewhat less ubiquitous, web-based messaging technology. AOL's Instant Messenger (AIM) is the best-known of the technologies, having changed the way offices work, lovers flirt, and friends connect via a free, easily downloadable (it's also integrated into its Internet service), chat-like interface with more than 40 million users.

But Instant Messenger isn't the only game in town. There's also AOL-owned ICQ, and Yahoo! Messenger; both Yahoo! and Excite (Nasdaq: XCIT) have long distance-free voice chat programs available. And Microsoft recently raised the kind of stink only Microsoft can when it released MS Messenger, a chat program compatible with AOL's.

AOL wasn't too happy with Microsoft's brazenly declaring itself part of the AIM community. The software giant wants an open standard so its messengers can communicate with AOL's, Yahoo!'s, and everyone else's, while AOL believes Microsoft is improperly accessing its servers, jeopardizing the integrity of its customer accounts. It may want to establish a pay-for-play system.

Is this just a case of Microsoft looking to horn in on AOL's action in an attempt to weaken a competitor? Or is AOL justified in wanting, if nothing else, some sort of compensation for establishing what has become the Internet's de facto messaging standard?

Whatever the case, companies are choosing sides. Both have assembled groups of corporate supporters with big names signing up for both teams.

Notably, AT&T (NYSE: T) has joined Microsoft's cause; the telecommunications company is at odds with AOL about open access to its cable network in a battle that seems something of a role reversal.

It's also worth considering the effect this battle might have on the government's case against Microsoft. Some believe the imbroglio's very existence deflates the Justice Department's case against Redmond, as it shows that competition is alive and kicking on the Internet.

But that's not the only issue at hand, particularly vis-a-vis Justice's contention that Microsoft undermined Netscape's web browser by installing its competing product on its industry-standard Windows operating system.

By creating an AIM-compatible messaging program, might Microsoft be attempting to repeat its manhandling of Netscape, with MSN Messenger likely to be eventually integrated into Windows? And what does this say to companies striving to establish standards of any kind if competitors can co-opt others' proprietary technology in the name of open access? And at what point in the development of a new technology can a system be declared so vital to the public interest that the government should even get involved, given the rapid pace at which things can change on the Web?

Some companies, it appears, believe AOL will win this one. Rather than develop its own technology, Apple Computer (Nasdaq: AAPL) in late July signed on to create instant messaging products that will let Mac users into the AIM family; today, both EarthLink Network (Nasdaq: ELNK) and MindSpring Enterprises (Nasdaq: MSPG) agreed to create co-branded versions of AIM, adding 2.5 million more users to the mix. Shares of both Internet service providers got nice boosts on the news.

For instant messaging to continue growing as a viable means of telecommunication as e-mail has, an open standard -- however achieved -- is vital. But if the issue gets caught up in the political process, as many Internet-related matters have of late, resolution may be some time in coming.

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By Dave Marino-Nachison (TMF Braden) (TMF Braden)

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