April 25, 2000 2:50 PM PDT

AOL instant messaging rivals file complaint with FCC

Rivals to America Online's popular instant messaging service today filed with federal regulators to treat the Internet giant's refusal to open its network to outsiders as a key competitive issue relating to its pending merger with Time Warner.

Puppet masters: Who controls the Net According to an iCast spokesman, CMGI's iCast and Tribal Voice have filed a complaint with the Federal Communications Commission that will ask officials to "encourage" AOL to open its network. The filing addresses interoperability only with the AOL Instant Messenger (AIM) service and not with AOL's separate ICQ instant messaging product.

"Allowing AOL to merge with Time Warner will only increase its ability to dominate and restrict consumers' freedom of choice in instant messaging," Margaret Heffernan, iCast chief executive, said in a statement forwarded to CNET News.com.

"Bullies are bullies and getting bigger rarely makes them more responsible," she added.

AOL has opened its service to outside providers, including IBM, Novell, Lycos, EarthLink, Apple Computer and Juno Online Services, through licensing agreements. These partners can use AIM technology to create their own branded, or co-branded, software to offer their customers, AOL said.

"We remain willing to work with anyone in the industry to bring instant messaging to consumers in a safe and secure way and, in addition to the agreements we've already announced, we are in the midst of talking to a number of companies who want to do exactly that," the company said in a statement.

AIM has 91 million registered members in its Buddy List network. Given the size of the network, some competitors looking to introduce their own instant messaging products have tried to force AOL's hand in opening its list of customers to competing technologies.

Last summer, Microsoft released a version of its MSN Messenger service that tapped into AIM's Buddy List, sparking a cat-and-mouse game in which AOL issued repeated blocks to Microsoft's numerous attempts to gain entry. Microsoft eventually backed down from the battle in November.

iCast and AOL also have locked horns on the instant messaging issue. In March, AOL blocked iCast's attempt to tap the AIM Buddy List.

You've got Time Warner iCast produces entertainment programming for the Internet. In February, the company launched its iCaster software, which plays video, MP3 music files, CDs and other audio such as radio broadcasts. It also allows people to instantly drag and drop music or video into a friend's instant messaging account. The instant messaging technology is powered by Tribal Voice's PowWow.

In December, AOL blocked unauthorized Tribal Voice messaging customers from its network, specifically targeting the company's largest clients: AT&T's I M Here and AltaVista's instant messaging service.

At the center of the debate is whether AOL should be required to introduce competition into a service it created and marketed on its own.

Instant messaging rivals say that AOL sits on a network of millions that should communicate with other products. They also say that by guarding its technology, AOL gains lock-in advantages. The company plans to introduce voice capabilities on its service and to add the service to upcoming wireless and interactive TV products.

Some analysts say that AOL should enjoy the momentum it has achieved from creating and marketing its popular products.

"This stuff is on AOL's infrastructure, and it's an application that they built from the ground up," said Seamus McAteer, an analyst at Jupiter Communications. "AOL conceived it, executed it and launched it."

The FCC does not consider instant messaging a telecommunications issue under its jurisdiction. But iCast spokesman Bill Golden said the company filed with the FCC because it wanted to position instant messaging as an "Internet communications issue." He added that the FCC provides a public forum to file these complaints, whereas the Federal Trade Commission is private.

"We're saying to the government that this is going to be a problem, and you can either solve it now or solve it later, and now is better," said Blair Levin, a regulatory consultant to iCast and Tribal Voice. "It allows the starting of the debate."

Though the companies' hopes that any action could come from the filing may be a long shot, it is still a tactical play in a greater strategic plan to force AOL's hand in opening its instant messaging network.

The question remains, however, whether Time Warner's deep entertainment and media assets are relevant to AIM's market dominance. According to Mark Ostrau, an antitrust attorney at Fenwick & West, the merger has little to do with the issue.

"I think it is a situation that is completely independent of the Time Warner merger," Ostrau said. "The merger itself doesn't change the competitive issue that results from instant messaging."

But that doesn't mean the complaint wouldn't have an effect on the government's examination of the deal. Rather, the fact that there has been a complaint filed to a regulatory body means the issue already is on the government's table. The filing could serve as a placeholder for future possible examinations of AOL, Ostrau said.

"It may have nothing to do with Time Warner, but while they're looking, they might as well look at anything else that comes across the transom," Ostrau said.

News.com's Patricia Jacobus contributed to this report.

 

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