America Online's IM system under investigation

The battle for control of the Instant Messaging market has been fiercely fought. Now the Feds enters the fray
Written by Jane Wakefield, Contributor

America Online's dominance of the Instant Messaging market is to be investigated by the Federal Trade Commission it emerges Wednesday.

The investigation will form part of the FTC's ongoing review of America Online's buy-out of Time Warner. America Online currently has over 90 million IM and buddy list customers and some analysts give them a 90 percent share of the IM market.

Its closed system has infuriatated other companies trying to jump on the bandwagon of the hugely popular IM service and many are keen to see a full FTC investigation.

AOL remains convinced the FTC will not find it has unfair market advantage. "With respect to IM we are confident it won't be an issue," says an America Online spokeswoman.

"We are working with other companies to bring IM to their members and our supportive of creating an industry standard." Companies to have struck licensing deals with America Online include Apple, Lotus and Lycos.

Mark Levitt, analyst with research firm IDC, is also not convinced there is a case for an antitrust investigation. "They do dominate the market and the question is whether they are using that monopoly to gain advantage unfairly. In my opinion AOL has the right to say that as it is a free service, they need support for the infrastructure," he says.

"AOL has been protecting its market share by saying to others you can work with us on our terms or don't work with us," Levitt goes on.

Microsoft went head to head with AOL last July when it set up a rival IM service MSN Messager allowing its users to communicate with America Online customers. America Online responded by blocking access.

According to the America Online spokeswoman consumers' rights are all-important. "Privacy and security are key," she says. "We want to protect our members from unsolicited instant messages."

Consumers are being ripped off. Competitors are being ripped off. Now finally, the Feds are getting wise to America Online. Jesse Berst will give you the latest reasons why AOL's grip on instant messaging must be broken. Go to AnchorDesk UK for the news comment.

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