AOL and Microsoft Still in Tug-of-War over XP
September 6th, 2008Apparently, the answer fluctuates by the day as well as the news outlet regarding the state of talks between AOL and Microsoft over prickly issues such as AOL's potential placement in Windows XP, which will be released Oct. 25.
In addition, Microsoft's reported plans to hard-wire its own Instant Messaging service in the XP operating system could be a deal-killer --- and enough for AOL to sound the anti-trust horn.
At last count, however, the tenuous-at-best partners at least appeared to be talking about striking a new deal to use the other's software products.
Although a Microsoft spokesman told news outlets on Friday that the talks between the two companies had broken down, AOL apparently said otherwise over the weekend; a Microsoft spokesman now says talks are still ongoing between the two companies.
The Wall Street Journal, citing people close to the negotiations, reports that the talks appear to be faltering. At the same time, the Journal reports that Microsoft is pushing onward with additions to its own software, enhancements that AOL deems anti-competitive.
AOL is reportedly upset by Microsoft's plans to tie in its own version of Instant Messenger into the Windows XP operating system, which is another key roll-out of Microsoft's .NET shift from desktop computing to incorporate Web-based and Internet-based services.
Whether AOL could rustle up some anti-trust issues with federal officials, just as Microsoft awaits an appeal of a federal ruling that it abused its monopoly power with Windows and should be broken up, is making the talks problematic at the very least.
The New York Times' John Markoff reports that a significant glitch between the two is Microsoft's demand that AOL back off an anti-trust challenge. The Times cited people close to both sides of the talks.
The report also says the two sides are still far apart on many key issues related to how they would incorporate the other's products, such as AOL's bundling of Microsoft's Internet Explorer with its products and Microsoft's addition of the AOL client in Windows XP.
Despite the importance of a bundling deal with Microsoft, AOL has some bargaining power too. Its 29 million subscribers put AOL in a solid position with other PC manufacturers as their default Internet service provider, for example.
Plus, Microsoft is looking for some placement of its Windows Media (audio and video) Player with AOL, which already has a deal with RealPlayer.