Microsoft Corp.

AOL's Instant Messaging Monopoly Under Threat

Strategic Insights

Jul 26, 1999 — 1 min read

As the technology landscape continues to evolve, America Online (AOL) finds itself facing strong competition in the instant messaging market, which it has long dominated. Microsoft and Yahoo!, in particular, are making significant strides in this space, threatening AOL's virtual monopoly. The conflict began when Microsoft introduced its MSN Messenger Service last Thursday, allowing users to communicate with AOL's 25 million Instant Messenger users. Yahoo! followed suit with a similar update of its Yahoo! Messenger service, further eroding AOL's market share.

Key Takeaways:

AOL has been making changes to its computer network to prevent users of Microsoft and Yahoo!'s instant messaging software from communicating with AOL users, citing copyright and trademark infringement.
Microsoft and Yahoo! have introduced measures to ensure their software continues to work on AOL, despite AOL's efforts to block access.
Analysts warn that AOL's loss of its instant messaging monopoly could lead to a decline in its appeal and potentially anger its users by blocking access to other messaging systems.
AOL stands to lose control over marketing messages and revenue streams if users switch to competing instant messaging services.
AT&T Corp. and Prodigy have expressed interest in developing an instant message standard to connect users across all systems.
Microsoft and Yahoo! have provided updates to their instant messaging services, including a fix for Microsoft users to regain access to AOL Instant Messenger.

Statistics:

25 million: The number of AOL users with access to Instant Messenger.
7 percent: The decline in AOL shares on Monday due to concerns over its instant messaging market share.
25 million: The estimated number of instant messaging users affected by AOL's actions.
2: The number of companies (Microsoft and Yahoo!) that have introduced competing instant messaging services.

Sources:

Microsoft representative (exact source not specified in the text)
Prodigy Chief Technology Officer Bill Kirkner
AT&T spokesman (exact source not specified in the text)

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