Last Thursday the proposed AOL/Time Warner merger was conditionally approved by the Federal Communications Commission. The newly formed company’s future success, however, will depend on it’s fulfillment with these conditions.
The conditions of the merger address four specific areas: AOL/ Time Warner must allow consumers using the company’s existing cable lines to choose their own Internet service provider, every ISP must be able to determine the content of each’s home page, each ISP must also retain control over it’s own billing arrangements, and most significantly, AOL must make instant messaging available to it’s competitors. AOL has stated that they consider that condition unnecessary, but will abide by it anyway.
Instant messaging has been an AOL-dominated service since it’s creation. Microsoft and Yahoo attempted to create their own instant messaging services, but were unsuccessful in sending e-mails to AOL users. In an attempt to rectify the problem, Microsoft and Yahoo created a service compatible with AOL users. These services were released in the summer of 1999, though AOL contested them, stating that the methods with which Microsoft and Yahoo used to gain access to AOL were improper. As a result, AOL has maintained an advantage on the competition.
There is some concern that this advantage will increase as a result of the merger. In the era of big business conglomerations, even with stringent conditions, consumers must remain wary. Many Internet users are concerned about Internet regulation and domination. Because of the international nature of the Internet, it is nearly impossible to regulate. The Internet has grown to be immensely popular because of the fact that it is not dominated by any one specific entity. The fear of AOL/Time Warner stifling competition has also led to fears of price hikes. Critics and consumers fear that the company would take advantage of their dominance, creating a monopoly, thus reducing consumer choice, similar to the result of Qwest’s merger with USWest. The FCC conditions, however, have been established to ease consumer fears.
With all the recent mergers and corporate expansions during the past decade, many small and intermediate sized businesses have been forced out of business, effectively decreasing the amount of options for consumers. Accordingly, as such a merger of media giants is objectionable, the conditions imposed by the FCC should prevent some anti-competitive behavior, if AOL/Time Warner abides by them.