Microsoft, Yahoo to Link IM Networks

A blockbuster interoperability deal between Microsoft and Yahoo will reshape the landscape of the fragmented instant messaging market.

Microsoft Corp. and Yahoo Inc. are set to announce on Wednesday a blockbuster interoperability deal that will reshape the landscape of the fragmented instant messaging market.

The companies will connect their IM networks so users on each can communicate with one another using text and voice chat free of charge.

The agreement marks the first time major players in the highly competitive IM industry have officially partnered up to enable cross-network communication. Interoperability has always been a hot topic among instant messaging providers, but had never yielded a compromise.

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In 1999, Microsoft connected its MSN Messenger client to America Online Inc.s AIM network—without authorization. The move led to a cat-and-mouse game of AOL cutting off its new competitor and MSN re-establishing communication with each update. Microsoft eventually gave up and focused on improving its client.

Such disparate messaging networks led to the creation of third-party clients with the ability to connect to each simultaneously. AOL and others were initially critical of applications like Trillian, but eventually backed down and ceased efforts to block the newcomers.

Yahoo and Microsoft will now command upward of 44 percent of the market, according to research firm Radicati Group, putting new pressure on market leader AOL, which holds around 56 percent market share with AIM and ICQ. And according to recent comScore Media Metrix numbers, MSN Messenger and Yahoo Messenger together reach 33.5 million unique users each month, more than the 23 million running AIM.

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