ISP War? Microsoft Targets AOL (Breakfast News) August 5, 1999


Thursday, August 5, 1999

"Money is truthful. If a man speaks of his honor, make him pay cash."
-- Robert A. Heinlein

ISP War? Microsoft Targets AOL

Microsoft (Nasdaq: MSFT) is reportedly planning to offer low-priced or even free Internet access, which threatens to upset America Online's (NYSE: AOL) dominant Internet access service, a service that accounts for about two-thirds of AOL's overall revenues, according to The Wall Street Journal. While AOL boasts some 17.6 million subscribers, Microsoft currently only has about 2 million Internet access subscribers.

Up until now, Microsoft has had little success affecting AOL's lead in Internet access. But according to the Journal, the software giant has "generously funded the new plan, formulated in the past six months." The attack on AOL is largely a defensive measure for Microsoft's core Windows operating system. Internal AOL documents disclosed in Microsoft's antitrust trial indicated that AOL planned to offer its online service as an alternative software platform to Windows.

Microsoft has tested a monthly service price of $9.95 and may offer free service to consumers who commit to a certain level of spending with Microsoft's e-commerce partners. Microsoft also has discussed purchasing or partnering with several large Internet service providers, including EarthLink Network (Nasdaq: ELNK) and MindSpring Enterprises (Nasdaq: MSPG), and partnering with PC makers such as Compaq Computer (NYSE: CPQ) and Dell Computer (Nasdaq: DELL), which have started their own access services.

News to Go

Online network Go2Net (Nasdaq: GNET) is acquiring privately held search engine company Dogpile LLC for $55 million -- $40 million in stock and $15 million in cash. The price may increase if Dogpile reaches certain undisclosed performance goals in the next 18 months. Dogpile's search engine looks for data across different search services for more relevant results. According to Go2Net, Dogpile has 2.3 million unique users and is profitable.

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By Yi-Hsin Chang (TMF Puck)

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