October 12, 2005 7:47 AM PDT

Yahoo, Microsoft join IM hands

Yahoo and Microsoft have announced plans to make their instant-messaging services interoperable in what analysts called a shot to market leader America Online's AOL Instant Messenger and a defensive jab to newcomer Google.

Beginning in the second quarter of 2006, customers of Yahoo Messenger or MSN Messenger programs will be able to exchange instant messages, see the presence of their contacts, share emoticons, add friends from either service and make PC-to-PC voice calls, Yahoo and Microsoft said Wednesday.

The companies had been in talks "with multiple partners for years," with Microsoft and Yahoo in "discussions in earnest for a year," Dan Rosensweig, Yahoo's chief operating officer, said in a question-and-answer session with journalists. "We've always wanted to do this," he said. "Both of us saw the benefits for consumers."


Asked why it took them so long to come to an agreement on how to solve what has become a headache for many instant-messaging users with friends on different IM platforms, Rosensweig said: "On a spiritual level, we feel like we're coming at this early."

He said the two companies wouldn't snub attempts by America Online's AIM or Google to interoperate, but Yahoo and Microsoft need to focus on getting the technical difficulties solved by combining their two networks first. "Our goal is to make it seamless and easy for users," he added.

Multiprotocol IM clients like Trillian and Fire seem seamless enough for many users, enabling them to use several instant-message programs under one interface. But Yahoo and MSN have tried to wall out third-party integrators, calling their moves pre-emptive measures against IM spam, or spim.

The agreement between Yahoo and MSN is limited in scope to core features and voice only between PCs. "Right now, this agreement does not contemplate voice other than PC-to-PC voice, but as we roll this out," outbound calling will be considered, Rosensweig said.

AIM dominates the instant-messaging arena in the United States, with 51.5 million users in September, compared with MSN's 27.3 million and Yahoo's 21.9 million, according to research firm Nielsen/NetRatings.

According to ComScore Media Metrix figures for August, AOL had 49.2 million users in the U.S., followed by MSN with 24.4 million and Yahoo with 22 million. Worldwide, MSN led with 185 million, followed by Yahoo with 82.1 million and AOL with 61.2 million, ComScore figures show.

MSN and Yahoo dominate instant messaging outside the U.S., said Blake Irving, corporate vice president of MSN Communications Service and Member Platform Group, though he could not provide market share or exact numbers.

Yahoo and Microsoft said the combined customer base for their two programs worldwide is about 275 million.

While all three companies have worked together in the past, most of the progress toward interoperability has been on the corporate side.

Search giant Google also has entered the IM market.

"In my opinion, the biggest external driver for this announcement must be MSN and Yahoo's mutual need to defend themselves in the long term against Google," John Delaney, an analyst at Ovum, wrote in a research alert. "Google is a relatively recent insurgent in these services, but it is clearly determined to grow its presence there aggressively," Delaney said.

"It's worth noting that AOL's attitude to interoperability in the past has been characterized by reluctance at best and outright hostility at worst," he added.

Calls to AOL seeking comment were not immediately returned.

"We believe this alliance is a defensive move and likely a reaction to the current market share dynamics in which Google continues to gain market share not only in search, but also in e-mail and news," Imran Khan, an analyst at JPMorgan, wrote in a research alert. "Given these dynamics, we believe that it is important for Yahoo and Microsoft to protect their valuable instant-messaging franchises."

Many people have gotten used to a "workaround" for having contacts on multiple IM platforms, like simply having them all running on the desktop simultaneously, JupiterResearch analyst David Card said.

"I'm sure the overlap of audience in the U.S. is high," he said in an interview. "This could have more of an impact outside the U.S."

The move could also put more pressure on AOL to open up its IM platform, Card said. As for Google, it isn't a real factor yet because they don't have many IM users, he said. "This isn't about Google; this is about AOL."

CNET News.com's Margaret Kane contributed to this report.

12 comments

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Ahhh Crud....
...If they keep this up who will we have to pick on?

After thinking about recent news about Microsoft I've come to the conclusion that Microsoft is losing their touch for being evil and I can see other companies taking the evil crown away from them. It was a good run but I guess all good er... evil things come to an end sometime.

All of this lawsuit settlement, blogging, and industry cooperation is starting to damage the evil image they worked so hard on achieving and is turning them into a big loveable software giant again.

They will have to really turn on the jets if they expect to prevent Apple or Google from stealing their crown of evil.
Posted by (6 comments )
Reply Link Flag
Don't worry
Don't worry, Google will never take the crown of evildom from Microsoft... whether Apple will or already has is up for debate. One factor that will help Microsoft maintain it's evil image however is the fact that they ARE settling lawsuits... which isn't really what we want. The more companies they settle with on the smaller issues, the fewer will oppose them on the important stuff. You've noticed whenever they settle with a company, that company is required to withdraw from all the other lawsuits filed against Microsoft? Add in the fact that settling isn't an admission of guilt, nor does it bring these issues before the court system to establish some ground rules, and you can see that settling is actually the most evil thing Microsoft can do at this point.
Posted by (7 comments )
Link Flag
Nah, still evil
Nope, they're still evil. They're just trying to be more "evil genius" and less "evil bastard." Plus, harder to sue someone who you have a strategic partnership with, especially if they're bigger than you and giving you money or technical expertise. (Microsoft Office on the Mac?)

They're just realizing that if they con others into helping them crush their opponents, they'll just look less evil.

Microsoft + Yahoo! - Google? Yahoo?
Microsoft + AOL - Google? Yahoo? AOL itself?
Microsoft + Real - Apple
Microsoft + Apple - Sun
Microsoft + Sun - IBM? Macrodobe?

Who really benefits in all these pairings?
Posted by TV James (680 comments )
Link Flag
what about google talk
what a pathetic attempt at such a great market for Google. In the end it will all be available from any service, so they better concentrate on making things sticky.

slopmarketing.blogspot.com
Posted by (6 comments )
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Someone had to start this eventually
With so many different IMs on the market it was just a matter of time before someone tried to get this hodgepodge of services somewhat together.
This has nothing to do with being more or less evil. All Corporations are "evil" - profit is the principle of capitalism, this is the driving force of everything built around us. As long as there is a profit to be made there is going to be a competition amongst those who want to make it. Sort of like a game of football or hockey - ther is only one ball/pack competition is great! Occasionally though we need a ref/government to keep everyone in line.
Back to the IM wars, Microsoft is never going to win this game 100% even if Yahoo decides to stick around all the way through. None Will!!!
Too many different services, too many standards, too many protected territories (patents). Watch now for Google starting buying other IMs and making them interoperable or signing a sim contract with other rivalry.
Posted by Montevale (31 comments )
Reply Link Flag
Finally!
Someone that will teach MSMessenger how to work behind a corporate firewall! or do voice correctly!
Posted by mpinones (4 comments )
Link Flag
Yep well finally
you are right man, someone would have started this eventually. I have been waiting for it for awhile also, seems that they are really feeling the heat being put on by Google. Seems we've got a new bad boy in town, with all their free stuff, they might just be the next Microsoft
Posted by vincentt (5 comments )
Link Flag
This isn't new
Something similiar to this(which does even more) was made quite a while ago I believe. It is called Trillian. It handles MSN, Yahoo!, AIM, and ICQ, along with others if you pay for the Trillian Pro. You get services other IM services and added features and skins. I have used Trillian, and it seems a lot better than this.

Michael
Posted by michael902 (4 comments )
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On a "spiritual" level?
What's up with this?

"Asked why it took them so long..., Rosensweig said: 'On a spiritual level, we feel like we're coming at this early.'"

So is Rosensweig saying that the reason IM interoperability hasn't happened is because God didn't want it to? Is this the Tower of Babel in reverse?
Posted by ssalava (41 comments )
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Good move...benifits to the users
Hi People,
I think you guys are reacting and overestimating Google. No doubt it's a giant when it comes to search, but Microsoft comes to the same count when it comes to desktop. Hence, just condemning MS is not appropriate. Does not mean I support all their evil doing, but afterall it's business. Look at the benifits the users will gain after this union. MSN, Yahoo interoperable, AOL will defintely roll up its sleeves and bring out many more new things for the users. Google, which I personally consider a very small player will have to pitch in with many more features and again this will benifit the users. Ultimately, we the users are gonna gain so many benifits by this union! I guess we should look at this rather than being urchins about a crasher or overrating a security breaching web crawler...
Posted by (1 comment )
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Not Global enough
I'm waiting for google talk and skype compatability.
Posted by sammadude (1 comment )
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