06/04 - AOL, Microsoft vow messaging cooperation - East Valley Tribune: Business

06/04 - AOL, Microsoft vow messaging cooperation

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Posted: Wednesday, June 4, 2003 10:29 am | Updated: 1:57 pm, Thu Oct 6, 2011.

NEW YORK - As part of their $750 million peace treaty, AOL Time Warner Inc. and Microsoft Corp. promised to try to make their popular Internet instant-messaging programs work together. AOL and its instant-messaging rivals have made similar pledges before.

Instant messaging is an Internet staple, commonly used by chatty teenagers and far-flung business colleagues. The services, which are generally free, let users set up "buddy lists" that indicate which of their friends are online, and whisk messages between them in real time.

The networks that facilitate these chats are closed, so unlike with e-mail, members of AOL's instant-messaging programs can't reach people on the services operated by Yahoo! Inc. or Microsoft's MSN.

Although bridging the services is possible through programs like one called Trillian, the general lack of "interoperability" frustrates many big users. Several investment banks got together last year to push the Internet companies to develop standards that would let instant messages securely cross networks like e-mail.

AOL has said for years that it is reluctant to open its network to rivals because doing so might compromise its users' privacy and security. Competitors have said AOL mainly wants to preserve its dominance in instant messaging.

AOL's instant-messaging programs, including a service it owns called ICQ, had 59.2 million users in April, according to comScore Media Metrix, which measures Internet usage. MSN had 23.6 million and Yahoo had 19.1 million.

The Federal Communications Commission tried to push AOL into interoperability by requiring, as a condition of its merger with Time Warner, that AOL make its network accessible to its competitors' services before it could offer video instant messaging, as MSN and Yahoo now do. Now AOL is asking the FCC to rip up that requirement, saying it no longer has a dominant market share in messaging.

Maurene Caplan Grey, a messaging analyst at Gartner Inc., said interoperability has been held up not by technical challenges but by the providers' refusal to cede control over their users. Although consumer instant messaging services are free, they are peppered with advertisements.

There's little reason to believe the standoff will end anytime soon, she said, despite AOL and Microsoft's joint statement in their legal settlement last Thursday that they would "explore ways to establish interoperability."

"We do believe AOL and MSN will now have a less public adversarial role," Grey said. "But that doesn't mean interoperability is going to be achieved any time in the near future. At least for the near term, this is going to be noise."

AOL and MSN representatives concede that figuring out financial terms has been a huge hang-up for interoperability. They won't predict when their new cooperation pact might play out.

"We're trying to figure out if we can do this economically," AOL spokesman Derick Mains said.

"It's a challenging problem," said Lisa Gurry, an MSN group product manager. "How you can deliver a great experience to consumers, but also potentially protect the investment you've made in your service, as well as potential opportunities that might develop in the future?"

Interoperability was such a hot issue for a while that several AOL rivals, including MSN, Yahoo and once-big Internet names like ExciteAtHome and Prodigy, formed a coalition called IMUnified in 2000. The companies sought to make their instant-messaging systems work together, in hopes of forming a critical mass of users AOL couldn't ignore.

Back then, too, AOL said it supported the idea of making its instant-messaging programs work with its competitors' services, and tested some approaches.

But AOL claims it never found a solution that was safe enough, and blocked services that connected to its messaging program. Talks between instant-messaging providers bubbled up, then fizzled. IMUnified disbanded.

Mains pointed out that AOL has made outside messaging programs, like iChat by Apple Computer Inc., open to its users, but only by hosting those services on its network - not the kind of solution that would work with MSN or Yahoo.

Yahoo spokeswoman Mary Osako said her company is still working toward interoperability. But she said it is too soon to comment on the potential of the AOL-Microsoft announcement.

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