Just when you thought the online world was going to be ruled by
Microsoft (assuming that it can beat the US government), AOL has gone and
changed the game by buying up Netscape.
Suddenly, Microsoft has a credible competitor. And ironically, Bill Gates
must be breathing a sigh of relief, since it is hard to think of a single
development more likely to weaken the US Department of Justice’s case that
Microsoft is a monopoly that must be stopped in its tracks.
AOL is the world’s biggest internet access provider, with 14 million
members. It is also the biggest concentration of content on the internet,
owning not only the AOL online service, but also CompuServe (two million
members), the aol.com web site, the AOL Instant Messenger messaging tool,
the ICQ chat network (20 million users), the local content network Digital
City and the AOL Netfind search engine.
If the proposed $4.2 billion acquisition goes through, it will also own
what is still (only just) the market-leading internet browser software and
the world’s fastest-growing web portal (Netscape Netcenter).
The Netscape acquisition, along with a strategic alliance with Sun
Microsystems, also gives AOL a powerful hold on the e-commerce
infrastructure of the internet.
The internet portals often liken their model to the way that the big TV
networks in the US control access to mass audiences by aggregating
content. By purchasing Netscape, AOL will extend its internet audience
reach dramatically, giving not only Microsoft but also the likes of Yahoo!
a run for their money.
How all this will affect Netscape’s and AOL’s partners in the UK, not to
mention all the other portal and e-commerce players, is still far from
clear. Netscape’s Netcenter might be the fastest-growing portal, but it is
also one of the newest and has a lot of catching up to do. How much
resource will be put into the UK Netcenter to compete with the very strong
UK Yahoo!, Lycos and MSN? How much will Excite benefit from its content
positioning on the UK Netcenter if AOL decides on a big web portal
push?
Whatever the outcome, the AOL acquisition is being seen here as a very
astute move. ”AOL is one of a handful of companies that have developed
models to convert internet traffic to revenue, and Netscape will give them
a lot more traffic,” said Charles Walker, who runs Lycos in the UK.
”For other, less skilled companies, it wouldn’t have been as good a deal.”
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