AOL Time Warner's lawsuit seems to be about Microsoft's competitive
practices in the Netscape-Internet Explorer browser wars. But the real fight
is over far higher stakes: control of Internet users' online presence.
Both the online content provider and the software developer are determined
to be the trusted party that Internet users rely on to store all kinds of
information--such as addresses, bookmarks, passwords and credit card
numbers. This "presence information" will eventually turn most online
transactions into a "one-click," Amazon.com-style experience, and whoever
controls it will hold a huge competitive advantage.
This is especially important to Microsoft and AOL Time Warner because their
products--software and content, respectively--lend themselves naturally to
subscription-based sales models. If either company can become the default
holder of presence information, it will have access to significant and
In their attempts to become the default presence provider, AOL Time Warner
and Microsoft have integrated instant messaging into their respective
browsers. This makes browser placement on the desktop--technically the
focus of the lawsuit--the cornerstone of any successful presence strategy.
AOL Time Warner has decided that Microsoft, which has been judged in violation of antitrust law,
is now highly vulnerable. If it is correct and wins the lawsuit it has just brought,
the content company undoubtedly will seek to have Internet Explorer removed from the
Windows operating system. In addition, it will argue that its "bundling
presence," taking the form of instant messaging, the Windows Media Player and
other transaction-enabling technologies, also is anti-competitive and must
Microsoft was correct about the threat that Netscape posed as an alternative
platform to Windows. By killing that browser early in its life, Microsoft eliminated
the threat of Netscape as an application platform. Few could have
anticipated, however, that the high ground in this battle would become
presence, an area where AOL Time Warner has a nearly insurmountable market
advantage and the force of law behind it.
Given the stakes, and the spin machines that both companies have at their
command, the fireworks around the AOL Time Warner suit hold
the potential to eclipse those of the government trial. But then, no one
ever accused AOL Time Warner--or Microsoft--of not offering spectacular
(For a related commentary on the increasingly adversarial relationship between
AOL Time Warner and Microsoft, see gartner.com.)
Entire contents, Copyright © 2002 Gartner, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.