Microsoft Gets a Taste of Its Own Medicine

Microsoft Corp. cried foul last week when America Online gave Bill Gates and Company a taste of its own medicine.

The dispute flared up when AOL began to electronically block messages from MSN members contacting AOL subscribers using Microsoft’s newly launched instant messenger. This angered Microsoft officials, who piously argued that instant messages, like e-mail, should flow freely between different online services. It found at least one major ally in Yahoo! — which also wants to make sure members of its online communities can instantly keep in touch with AOL’s legion of subscribers.

Battle Over Turf

But some analysts say that AOL — rightfully so — sees Microsoft’s foray into the instant messenger arena as a preemptive strike to chip away at its dominance of the one-on-one chat vehicle. In addition, they point out that by throwing up electronic barbwire, AOL is only protecting its 80 million subscribers from a ruthless predator.

Moreover, during Microsoft’s antitrust trial with the Justice Department this year, it’s been alleged many times that Bill Gates and Company had no qualms about stamping out its competition. Netscape watched helplessly as its robust browser business plummeted when Microsoft came out with its own browser giving it away. In addition, hours of testimony has accused Microsoft of bullying its partners into dropping operating systems and software that competed with Windows — or face the consequences.

So, it’s not hard to imagine the queasiness that AOL’s top executives must have felt in the pits of their stomachs last week, as they watched Microsoft try to repeat history by invading what they must have thought was safely theirs.

Feign Before the Attack

Yet, some analysts argue that this instant messenger tiff could just be a minor annoyance compared with the real battle shaping up between the two giants. Microsoft is clearly ahead in its quest for broadband and its bloated coffers make AOL look like it’s a pauper. Perhaps Bill Gates is just letting Steve Case know he’s still around — like a champion prizefighter drawing blood from an upstart challenger.

No matter what its motivation, Microsoft has managed to prove something else in its latest scrimmage with AOL: It’s not the only company that likes having the marketplace all to itself.