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Tuesday, Jun 6, 2023

Cybersense — Rivals Sending Message to Feds About AOL Software

As Microsoft contests its court-ordered breakup, another high-tech giant might be preparing to follow in its footsteps.

America Online lacks monopoly power in its principal business as an Internet service provider. Although the company’s 25 million subscribers make it the world’s largest ISP, most of the Net’s 300 million users log on through some other company.

But AOL does control more than 90 percent of the market for instant-messaging software. And while this monopoly might not seem like a big deal, it could gum up a much bigger deal: AOL’s pending purchase of Time Warner.

Instant-messaging software allows Net users to chat with each other in real time. It also offers an easy way to see if the friends on your “buddy list” are online.

The process is familiar to anyone who’s logged time in a chat room. But for those whose online interaction has been limited to e-mail and Web forums, the immediacy and intimacy of instant messaging can come as something of a revelation.

Nearly 91 million people have signed up for AOL Instant Messenger, or AIM. The company also owns ICQ, the second most popular instant messaging software, with 62 million users. Other players in the market – including Microsoft, Yahoo and smaller companies like Tribal Voice and iCast – can claim only a fraction of those numbers.

Why is AOL’s software so popular? It certainly isn’t the price. Instant-messaging software is available for free because it’s seen as a vehicle for advertising, e-commerce and other money-making services.

AOL’s dominance also has little to do with the software itself. Even if AIM or ICQ were the easiest to use or boasted the best features, it wouldn’t matter. The real reason AOL’s products are the most popular is precisely that: They’re the most popular.

Unlike telephones, which connect to each other regardless of who made them, instant-messaging clients only work with others of the same brand. Since AOL has the most users, anyone who wants to chat with those people must become AOL customers themselves even if they prefer someone else’s software.

Microsoft and other competitors have tried hacking their way into AOL’s network, but the company has aggressively defended its turf. But when AOL announced plans to acquire Time Warner, competitors decided to move their battle to another front: Washington, D.C.

More than 40 companies asked the Federal Communications Commission earlier this month to “encourage” AOL to open its network as a condition of approving its merger. Tribal Voice and iCast also filed a complaint with the FCC in April, accusing AOL of scuttling innovation and economic growth.

“AOL already is, and has the potential to become an even greater, bottleneck to prevent the emergence of a robust, competitive instant-messaging market,” the complaint reads. “Instant messaging needs to be protected from the control of a single entity.”

Federal regulators might be tempted to agree, if only to avoid a repeat of Microsoft’s antitrust battle. AOL’s messaging dominance is as clear as Microsoft’s PC operating system monopoly. That alone isn’t illegal, but antitrust issues arise when a monopolist leverages its power in other markets.

There are indications AOL could do just that. Instant-messaging software is being discussed as a potential platform for a number of services, including phone call forwarding, location monitoring and most immediately content delivery.

If AOL uses its messaging monopoly to gain an upper hand in some new venture, the Justice Department could simply employ a little cutting and pasting and reuse the same legal forms it filed against Microsoft.

At least Microsoft can credibly argue that its operating system monopoly has benefited computer users by providing a predictable platform for PC programs. AOL’s messaging monopoly serves no one but AOL, discouraging innovation and thwarting attempts to create an open universal standard.

If the FCC insists, I suspect AOL would allow competing programs to communicate with its instant messengers rather than risk rejection of its Time Warner deal.

Of course, if federal regulators are enjoying beating up on Microsoft, they might just stand pat. That way, they could hope to have just as much fun someday with AOL-Time Warner.

To contact syndicated columnist Joe Salkowski, you can e-mail him at joes@azstarnet.com or write to him c/o Tribune Media Services Inc., 435 N. Michigan Ave., Suite 1400, Chicago, Ill., 60611.

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