The Finch Formerly Known As Gold

30 May 2003

The MS/AOL connection

Tristan Louis analyzes the Microsoft/AOL agreement, and what is most interesting about his analysis, I think, is his take on the internal politics of the two companies:

In the mid-90s, Microsoft was starting to move more into the general media space. With this agreement, Microsoft signals the completion of a shift back to its software roots. It is probably a realization that there is still a lot of growth in that arena and that it doesn't make sense from their standpoint to try to get into the media world by acquiring and/or building media assets.

On the AOL/Time-Warner front, this annoucement shows a clear power shift in who controls the company. The power is now in Time-Warner hands, with any concept of competing with Microsoft on the software end now a distant memory. Time-Warner understands media and figures that it is better to rely on an outside party to deal with the software side of the business than to try to develop things themselves.

How this fits with the rumors that AOL will be spun off from the rest of Time Warner remains to be seen, but fractiousness has been part of the corporate program ever since Warner Communications merged with/was absorbed by/ransacked Time Inc., and peace in the valley will not be bought by selling off those damnable Internet interlopers.

As for Redmond, well, they're never happier than when they're dominant.

Posted at 7:01 PM to PEBKAC