AOL Time Warner's lawsuit seems to be about Microsoft's competitive practices in the Netscape-Internet Explorer browser wars. But the real fight may be over higher stakes.
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 recurring revenue.
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 be stopped.
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 entertainment.
(For a related commentary on the increasingly adversarial relationship between AOL Time Warner and Microsoft, see gartner.com.)
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