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Lost in Cyberspace

AOL deal may help blunt Microsoft's power online

This article was originally published on January 18, 2000 by SignOn San Diego and Copley News Service.

If nothing else, AOL's purchase of Time Warner seems to have ended the debate over whether the Internet is a mature industry.

It wasn't even 15 years ago that Steve Case began America Online as Q-Link, a dial-up online service for owners of Commodore 64 computers; now, Case's former startup is poised to become the largest media conglomerate on earth.

Perhaps more significantly for those interested in personal computing in general, and the Internet in particular, AOL's acquisition of Time Warner (including its 13 million cable TV subscribers) is likely to forever tilt the balance of power away from Microsoft – especially in the online arena.

While Microsoft will remain a more valuable property than the combined AOL-Time Warner, it's value lies primarily in its control of the operating system market through its dominant Windows program. AOL's strength is far more diversified – its new holdings will include both dial-up Internet access (20 million subscribers); cable TV subscribers (13 million); Time and People magazines; the CNN, HBO and TBS television networks; and the Warner Bros. movie and TV studios.

A company with that kind of clout isn't going to take kindly to a one-horse outfit like Microsoft trying to control the Internet.

Remember that Steve Case testified against Microsoft in the government's antitrust trial against the software behemoth. And AOL just bought Netscape last year in order to be able to counter Microsoft's newly dominant Internet Explorer Web browser.

Microsoft has been pushing hard to see its own private, proprietary standards adopted on the Internet – working hard to undercut multimedia platforms like Java, RealMedia, Flash, MP3 and others. By trying to foist its Microsoft standards in the online world, Microsoft hopes to gain the kind of control over the 'Net it enjoys in personal computers.

But as Microsoft is busy pushing its own streaming software, AOL has gone out and bought one of the largest collections of original media – books, music, movies and news – in existence.

Suddenly, if Microsoft wants to be taken seriously online, it's going to have to come to Steve Case, president and CEO of AOL. For his part, Case is unlikely to agree to pay licensing fees to Microsoft in order to convert Time Warner's collection to digital format – not when there are other formats not controlled by Bill Gates, such as the above-mentioned RealMedia, MP3 and others.

Further, AOL has been busy working with Sun Microsystems and others on developing Internet devices that don't depend on Windows at all – specialized computers for going online. Look for the new AOL Time Warner conglomerate to throw its weight behind Linux, an alternative to Windows, and other options to bypass Microsoft's stranglehold on the PC market.

Will the AOL Time Warner merger be good for consumers? Too soon to tell – It may be that what we're seeing is the beginning of a whole new monopoly that we'll have to worry about down the road.

But for now, it's nice to see someone come along with enough power and money to stand up to Microsoft and create more of a level playing field.