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What AOL stands to lose in browser war

With America Online publicly distancing itself from the desktop browser war with Microsoft, observers are re-examining what is at stake in the browser war and finding it just as seminal a conflict as it ever was.

With America Online publicly distancing itself from the desktop browser war with Microsoft, observers are re-examining what is at stake in the browser war and finding it just as seminal a conflict as it ever was.

The browser war in the short term presents little immediate threat to AOL's bottom line; the browser itself is not a source of revenue for either company. Puppet masters: Who controls the  NetBut in the longer term, AOL is looking nervously at a Web increasingly defined by Microsoft on two crucial fronts: commerce and content on one hand, and technology on the other.

A Microsoft browser monopoly could spell disaster for the leading online service and other Microsoft competitors on the Web, as content and commerce ventures could be forced to deal with Microsoft for access to any consumer getting on the Web from a PC.

One reason the situation may seem abstract is that today's browsers offer users considerable choice in how they browse the Web. Although both companies hope to get users hooked on their start pages, users easily can change their browser settings to begin with whatever portal, content, or commerce site they prefer.

But without a significant competitor to Internet Explorer on the market, that might no longer be the case.

"If there's See news analysis: AOL down, not out in browser fight only one browser, do you think in 2004 you can still change that home page?" asked Ramanathan Guha, chief technology officer of and former principal engineer at Netscape.

"The people who decide what icons are on the browser have a real power over what is consumed," Guha said. "In a world with one browser, there is a real danger of coming to a model where the way you get your stuff presented is by doing a deal with MSN. If the Net is the world's repository of information, a modern day Alexandria, it is really, really, really important that there not be one company with a dominant influence on the way information is consumed."

Guha compared future battles over the IE start page to the "screen wars" that erupted between Microsoft and computer makers at the dawn of the PC revolution of the 1980s. At that time, Microsoft acted to prevent computer manufacturers from altering the Windows start screen, saying the "Windows experience" had to be preserved. Microsoft has since become more flexible with PC makers, a loosening many credit to years of government scrutiny.

Microsoft did not rule out making the IE start page a permanent fixture.

"We need See related story: The new world order to be able to provide a great default experience the way we always have to provide the best user experience," said Shawn Sanford, group product manager in the consumer Windows division of Microsoft. "We're always going to listen to our customers, and I can't speculate what's going to happen six years out."

Standards are key
The other component to a potential browser monopoly that is keeping Microsoft's competitors up at night is the prospect of Microsoft controlling Internet technology standards. If Microsoft locks up the browser market, the company becomes the only significant player designing HTML architecture. That means Microsoft could continue to control the operation and interoperation of traditional desktop applications, which are rapidly evolving through the Web.

Although standards bodies such as the W3C exist to prevent any one player from dominating Web standards, a company with a lock on the market has effective control of their development.

Some say Web standards today are the equivalent of Windows application programming interfaces (APIs) a decade ago.

"To the extent that Microsoft lost control of [Web standards] to Netscape in the past several years, they lost a ton of momentum and influence in where things were going to go," said Randy Littleson, executive vice president of Internet software firm Spyglass, which designed the browser that Microsoft licensed to create Internet Explorer.

"One of Microsoft's hugest assets is the development community writing to their APIs," he said. "It lets them dictate how the front end talks to the back end. To the extent that the development community had a default client in the Netscape browser, Microsoft risked losing that advantage. Now they have neutralized that threat."

Eclipsing the Web?
Microsoft correctly Portals: the new desktop? predicted that the browser would begin to supplant the desktop operating system as the primary platform for software development. Applications formerly run from the desktop, including email management, word processing, and file storage, have been migrating to the Web en masse in the past year.

In its defense in the antitrust suit against it, Microsoft has argued that this migration has undercut its operating system advantage and proved the company faces ample competition. The Web, some have argued, is the cross-platform end-run around Microsoft's Windows monopoly.

But just as Microsoft argues that the Web has pulled the rug out from under its desktop software juggernaut, the company appears to be gaining a lock on the Web, too. Indeed, some portals already offer tools with Windows-only functionality.

Another way Microsoft could wield power through a browser monopoly is by locking Web publishers and merchants into its own proprietary technologies for tools vital to e-commerce, Epinions' Guha warned.

"One-click buy is something a lot of people are talking about, and it's not trivial to implement that," he said. "If the technology had browser support you could enable one-click buying for all merchants. But if Microsoft owns the only browser, you might have to go and pay Microsoft $10 million in order to do it.

"In order to be any kind of significant player on the Net, you'd have to cozy up to Microsoft, and you'd have to give them money," Guha added.

Microsoft responded that even in markets where it has a clear lead, it continues to work within standards bodies and cooperate with other companies. Microsoft also maintained that even within the context of its Windows franchise, software application developers have ample opportunities.

"We work with a large community of partners with Windows," said Sanford. "We will continue to do that no matter how the market turns out."