AOL/TW Merger Refuels Messaging Battle

BOSTON (05/17/2000) - The pending merger of America Online Inc. (AOL) and Time Warner Inc. has rekindled the IM (instant messaging) battles from last year, again drawing ire from AOL competitors who charge that the company is hindering standards development.

The rancor began last year when AOL blocked competing instant messaging applications from connecting to its AOL Instant Messenger, or AIM software.

Microsoft Corp.'s MSN Messenger, iCast Corp.'s iCaster and Tribal Voice Inc.'s PowWow all were locked out of connecting with AIM.

The planned merger between AOL and Time Warner, which still must receive regulatory approval, has renewed criticism and efforts by competitors of Dulles, Virginia-based AOL to bring the standards debate to the fore. Critics have blasted AOL for thwarting progress toward an Instant Messaging and Presence Protocol (IMPP), which has been in development by the Internet Engineering Task Force (IETF) for two years. The IETF has set a June 15 deadline for IMPP proposals.

"If AOL is behaving like a bully now as far as instant messaging, it seems implausible that they will behave differently (after the merger)," Margaret Heffernan, chief executive officer of iCast, said in a telephone interview.

Telephone messages requesting an interview with an AOL official for this article were not returned. When the dispute emerged last year and became particularly heated between AOL and Microsoft, AOL officials were insistent that the company was doing nothing other than protecting its users because Microsoft's software accessed AOL servers and subscriber passwords.

"The common goal here is to arrive at a standard for instant messaging," AOL spokeswoman Tricia Primrose said at the time. "But we are not going to allow Microsoft to hack into our instant messaging servers."

AOL also announced agreements allowing AIM and software from IBM Corp.'s Lotus Development Corp. and Novell Inc. to interoperate. The company further said it was working with Novell, RealNetworks Inc., Sun Microsystems Inc. and Apple Computer Inc. on standards. Both AOL and Microsoft have submitted technical information to the IETF regarding an instant messaging standard.

Critics contend that AOL is more concerned about market share than about open standards and that is why the company is blocking efforts in that direction.

Throughout the debate, AOL officials have been steadfast in arguing that their main intent behind blocking access to rival IM software is to protect their users.

The standards issue has become more important in recent months because instant messaging has gone beyond fun chats between online "buddies" and loved ones to gaining widespread business use, particularly for companies with remote offices, telecommuting employees and far-flung customers and partners. Because of such developments, AOL critics contend, interoperability between rival products is all the more important.

"The way AOL is behaving is disastrous for any new company online. It has terrible consequences for the industry, terrible consequences for creativity, terrible consequences for innovation, terrible consequences for consumers and terrible consequences for the Internet," iCast's Heffernan said.

The blocking earlier this month of ABC Inc. by Time Warner cable systems raised further concerns about the merger and about Time Warner's tactics, leading Walt Disney Co., which owns ABC, to ask federal regulators to place limits on the merged company. Blocking ABC denied paying cable users access to one of the major U.S. non-cable broadcasting networks during the all-important ratings "sweeps" period when networks beef up their programming to lure viewers and advertisers.

"That was a classic example to misuse market dominance," Heffernan said of Time Warner's behavior regarding ABC, which might not bode well for how the company might act under a merger. Even under the pending AOL merger microscope, Time Warner blocked a competitor.

"If AOL feels like it can get away with (blocking access), it will. AOL started blocking anyone trying to interoperate. Even with so much public scrutiny, they abuse their position," Heffernan said.

The U.S. Federal Communications Commission (FCC) must approve the AOL, Time Warner merger before it can be completed -- a process expected to be finalized by the end of the year. But those critical of AOL's tactics have filed comments with the FCC, urging the agency to deny the merger, which rival instant messaging vendors think will strike a blow to interoperability if approved.

Tribal Voice and iCast recently sent about 2,000 consumer petitions to the FCC demanding that AOL open its instant messaging services and make its products interoperable with those of other companies. Both firms also submitted briefs to the FCC saying that the agency should ensure that AOL honors its promise to support instant messaging standards and open communication. [See "ICast Joins AOL-Time Warner Fray," April 26.] In addition, iCast sponsors freeIM.org, a Web site dedicated to instant messaging programs embracing an open protocol standardAn iCast spokesman said the point of the briefs isn't to say that AOL and Time Warner should not merge, but that if the merger is approved, the company should be forced to behave responsibly.

The iCast filing zeroes in on four key points: that the instant messaging market requires openness and interoperability to drive innovation; that consumers benefit from being able to choose between products; that AOL claims to advocate open standards but refuses to participate with the industry, and AOL further advocates that instant messaging providers need to be licensed by AOL; and that before approving the merger, the U.S. government should insure that AOL keeps its promise to support open standards.

A separate Tribal Voice brief argues that instant messaging is rapidly becoming an essential communications product for business as well as consumer use, so interoperability is important as more people use messaging. The brief further says that there are no technical or operational obstacles to interoperability.

AOL, the document charges, is the only obstacle, refusing to participate in working toward standards even as it professes commitment to open standards.

"A communication product that doesn't talk to other communication products is a 'boat anchor'... If AT&T brought out a phone that didn't work with Sony and other phones, people wouldn't buy it unless they didn't have a choice. AOL is not giving people a choice," Rob Enderle, an analyst with Giga Information Group Inc., said.

Besides filing briefs with the FCC, competing vendors also are making their case to the U.S. Senate. Microsoft, Excite@Home Inc., AltaVista Co., AT&T Corp., CMGI Inc. (the parent company of iCast and Tribal Voice), iCast, Tribal Voice and Prodigy Communications Corp. sent a letter to the U.S. Senate Subcommittee on Communications and the Senate Commerce Committee to raise awareness regarding the lack of progress in reaching an instant messaging standard.

The letter observed that AOL has repeatedly blocked interoperability and has not participated "meaningfully" in IETF efforts to reach a standard. The companies said they aren't taking a position on the AOL-Time Warner merger, but want to ensure that all Internet users can enjoy instant messaging no matter which service provider they choose.

During the fray with Microsoft over instant messaging interoperability with MSN Messenger, AOL said that it has agreements in place with ISPs (Internet service providers) and software companies so that the various instant messaging products will interoperate.

AOL might already have made such strong inroads that the standards debate is, in effect, over.

"AOL, with ICQ and Instant Messenger, has the largest market share. You could argue that they do represent the standard" in instant messaging, Giga's Enderle noted.

ICast, in Woburn, can be reached at http://www.icast.com/. Tribal Voice, headquartered in Denver, Colorado, is at http://www.tribalvoice.com/.

Microsoft, in Redmond, Washington, can be reached at +1-425-882-8080 or http://www.microsoft.com/. AOL, in Dulles, Virginia, can be reached at +1-703-448-8700 or at http://www.aol.com/. Time Warner can be reached in New York at +1-212-484-8000 http://www.timewarner.com/.

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