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An Instant Message to AOL’s Competitors

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An Instant Message to AOL’s Competitors

 

From the August/September 2000 issue of CEI UpDate

 

In late July, the Federal Communiations Commission held a hearing on issues surrounding the America Online/Time Warner merger. Some of the discussion examined the AOL Instant Messenger (IM) real-time chat tool, now far and away the market leader with 50 million users (available at http://www.aol.com/aim/home.html).

 

Customers appear happy, but a group calling itself “freeIM” clearly is not.

 

Is freeIM a group of consumers? Nope, it’s a coalition primarily managed by Tribal Voice (www.tribalvoice.com), a company that makes a competing messenger called PowWow (available at http://ww2.tribal.com/download/). freeIM members want AOL to make IM interoperable with competing instant messaging services like their own.

 

On its website, the freeIM coalition (www.freeIM.org) features an image of the famous AOL running man icon, teary-eyed and imprisoned behind bars, with the slogan “The AOL Lockout Continues.” The group claims that “Instant Messaging should be unfettered by monopolistic corporate actions and intentions.”

 

An online petition featured on the site claims that “Instant Messaging (IM) Interoperability is vital to the successful future of the Web. An Instant Messaging tool should function like electronic mail. E-mail users are able to communicate across all systems and lines, REGARDLESS of provider.” freeIM concludes that “America Online should make its IM service open and interoperable.”

 

But should it really?

 

It is not monopolistic, as freeIM claims, for AOL to have created a product that consumers choose to download and that in turn dominates the marketplace. What is monopolistic and anticompetitive, however, is freeIM’s mass-collusion campaign to engage the power of government to force the winner to share the spoils.

 

AOL claims to be working toward open standards like those that Free IM seeks, and has submitted a proposal to the Internet Engineering Task Force, (http://aim.aol.com/openim), but it is unlikely that it has any legitimate interest in sharing its customers with competitors. Rather, surely AOL would prefer that users of Tribal Voice and others switch to IM. But instead of admitting that, AOL’s approach has been to claim that opening IM to interlopers could threaten AOL users’ privacy and security. There may be some truth to that, but AOL needs to avoid going down this excuse-making path and simply defend its right to tell the interlopers to go to Hell. Its competitors aren’t interested in a standard so much as they are interested in getting AOL’s customer base without effort.

 

The freeIM coalition’s bizarre calculus is that, since it provides messenging services, then, somehow, it has a right to a vast user network that it didn’t help assemble and create. The coalition, of course, has no more right to free-ride on AOL’s customer base than you or I do.

 

It is getting rather tiresome, frankly, to watch the high-tech community, in nearly every category, from operating systems to auction sites, attack the winner. Those demanding open access are always united by their desire to hitch an uninvited ride on someone else’s property. Whether the FCC Commissioners see through this ruse is yet to be determined.

 

The bottom line here is that AOL already has established a standard, thank you very much, and it doesn’t need the stamp of approval of others to exist on its own terms. Tribal Voice and its coalition are more than invited to create a competing standard and/or new features to lure customers away (downloading is still free, after all). In fact, Microsoft’s competing MSN Messenger Service (available at http://messenger.msn.com), now offers free long distance phone calls to its 18 million users over the Internet. Otherwise, freeIM members must use their vast resources to cut legitimate business deals with America Online for access. Every producer under capitalism must understand that they’re on their own: no other player is obligated to help them succeed.

 

The FCC should realize that shoehorning competitors into AOL’s system is counterproductive for competition anyway. We might not get the pace of innovation we’re seeing—such as the long distance offering from MSN, or the aggressive plans by some to use instant messenging for real-time customer service—if the network is turned into a lazy public utility by access regulation that takes away the very need to devise competing business models and rival networks.

 

Ultimately, any dominant IM company constantly threatened with entry will likely be induced to offer open access voluntarily. In other words, it would be dumb for AOL to be so intransigent that it drove its customers to competing offerings. Thus the aims of Free IM will yet emerge—but in a market-driven manner. Meanwhile, AOL can do the marketplace no harm whatsoever, as long as downloading someone else’s software remains an option.

 

Wayne Crews (wcrews@cei.org) is a senior fellow at CEI for regulation Policy.