As one of the most formidable media corporations in the country, America Online has an overwhelming and irrefutable hold on many markets. AOL Time Warner Inc. operates six major businesses, including its online service, television networks, publishing companies, film studios, record companies, and cable networks. At times it seems that nearly everything media related has passed through some AOL subsidiary. America Online is such a powerhouse because of the 29 million paying subscribers to its online service, which provides access the Internet and other original content. Not only is AOL Time Warner’s scope frightening, but America Online’s on again, off again contracts with software giant Microsoft are reasons for concern. Current talks between the two to renew and revise a partnership could reinforce the stranglehold they have on the technology and media markets. It would be in the better interests of the American consumer for an alliance to not take root.
The discussions are at an early stage, and the two corporations have had partnerships in the past. The talks involving Microsoft’s new operating system and the browser Internet Explorer could help clear the path for future technology-related monopolies. On Jan. 1 of this year, a contract ended that bundled America Online software onto the Windows desktop that made Internet Explorer the default browser for AOL. A similar contract might be in the works regarding Microsoft’s Windows XP and a new compatible version of America Online.
Alliances between Microsoft and America Online have always been unusual considering that they compete in some markets and work together in others. AOL Time Warner also owns Netscape and ICQ, which respectively compete with Microsoft’s Internet Explorer and MSN Messenger. Not only that, but after America Online announced plans to increase its monthly service charge last week, Microsoft’s MSN service launched a $50 million ad campaign to encourage America Online members to switch to its service. America Online and Microsoft seem to have a love-hate relationship, one day working together to harness their mutual power, and the next day conniving to undermine each other. However, AOL appears to be more willing to bend in order to appease Microsoft during agreement processes.
Fortunately for consumers, Microsoft and America Online have yet to make a true alliance. The monopolistic nature of both corporations is a threat to economy, especially burgeoning businesses which attempt to offer alternatives. Partnerships can be a smart step for many businesses, but by having competing interests in many areas, tension will inevitably make the relationship unstable. Perhaps their competing interests will prevent them from agreeing on minor details during the XP talks and prevent the two behemoths from strangling the technology market.
