The merger of
won't go through without some sacrifice -- not if
can do anything about it.
The Massachusetts-based Internet conglomerate led by David Wetherell is trying to compel AOL to permit users of non-AOL Internet instant-messaging software to communicate easily with users of
AOL Instant Messenger
At stake are potentially billions of dollars and access to Internet software that some investors think could ultimately be more important than the Web browser. For AOL and CMGI -- which both have fallen substantially from their highs during the tech malaise of recent months -- any setback could mean a lucrative opportunity lost.
The Compatibility Question
Bill White, a CMGI executive vice president, says the company is preparing to file a complaint with the
Federal Trade Commission
that would force AOL, the nation's largest online service, to make AOL Instant Messenger compatible with instant-messaging systems developed by CMGI subsidiaries
Tribal Voice CEO Ross Bagully goes even further, suggesting that AOL's purported lack of enthusiasm for instant-messaging compatibility -- it's called "interoperability" in the trade -- constitutes an abuse of AOL's market power. Bagully estimates that between AOL Instant Messenger and the AOL-owned
service, AOL controls 90% of the instant-messaging market.
"To me, this is clearly a
case waiting to happen," Bagully says. "I believe from the DOJ perspective and from the monopoly-behavior perspective ... what AOL is doing is far more onerous than what we've seen
Calls to AOL representatives seeking comment weren't returned. The company has said it supports the interoperability of instant messaging, but outsiders say AOL hasn't followed up on those words.
AOL has licensed its AIM software to other companies, but Bagully calls that an unacceptable compromise. Says Brian Park, senior producer at
for Yahoo! Messenger: "There's been some progress in the standards area ...
but there's been no real progress in terms of solutions that are available to users."
The statements from the CMGI camp reflect a quiet, multipronged effort to turn the instant-messaging issue into a condition of the AOL/Time Warner merger. In late April, both Tribal Voice and iCast filed with the
Federal Communications Commission
to make interoperability a condition of the merger. iCast is sponsoring
FreeIM.org, in an attempt to mobilize grass-roots support for an interoperable instant-messaging standard. Bagully says representatives of Tribal Voice and iCast are talking to people at the FCC and on Capitol Hill to push their side of the instant-messaging argument.
"We intend to win on this issue," Bagully says.
Bagully, whose firm's PowWow instant messaging software has 8 million users worldwide, says the ability to exchange messages with AOL Instant Messenger users is crucial to his company's growth. The situation is comparable, he says, to that of a small phone company in the days when
dominated the phone system. "Why would you buy my telephone service if you couldn't talk to all the people who had
AT&T phones?" he says.
But the issue is about much more than brief messages sent in real time between friends seated at different computers. AOL's competitors say instant-messaging software will be the platform for an unimaginable range of services in the years to come, as more people adopt the software, as greater numbers of computers have always-on connections to the Internet via DSL or cable, and as a whole range of devices, including cellular telephones, become vehicles for instant messaging.
All of these factors, some say, mean that instant-messaging programs will one day be more commercially valuable than Web browsers. "The market certainly has the potential to be in the billions," CMGI's White says. "You're talking about potentially tens of millions of simultaneous users ... hundreds of billions of advertising and e-commerce opportunities. You're talking about a lot of money."
Ken Smith, co-portfolio manager for the
Future Technology funds, says instant-messaging software represents an even bigger opportunity than the browser. "The browser is just a small front end to a platform," he says.
Yahoo!'s Park points out several different commercial opportunities based on instant messaging. Advertisers can do more targeting based on location and content, he says. An instant-messaging yellow pages, he says, might enable consumers to communicate with companies without ever going to a browser, and conduct transactions without using a browser, too. One high-growth area for instant messaging is voice communication; another is sending brief messages to cell phones. "There are a lot of cool ideas floating around," says Park.