AOL Wants It Any Way That Profits Itself

America Online has been much in the news lately and it no longer should be possible for politicians to ignore the grasp for power that this company’s actions, as well as its name, implies. Wanting it both ways, AOL proclaims its faith in the free market--merrily gobbling up competitors--while at the same time insisting on government intervention to ward off rivals that threaten the company’s profits.

Portraying itself as a victim of unfair competition, AOL now threatens lawsuits to exercise exclusionary power over its instant messaging software, which is used by more than 40 million Americans as a primary means of online communication. If there’s a wired dialogue in real time, it’s through this highly popular AOL service, which allows one to know if other associates on a “buddy list” also are signed on.

Last year, AOL purchased ICQ, the major alternative instant messaging system, putting AOL in command of 80 million users, whose almost 800 million messages a day exceed the entire mail volume of the U.S. Postal Service.

That’s an awesome monopoly power if other Internet mail servers cannot freely interchange with the AOL system. But last week, AOL sought to rebuff attempts by Microsoft and Yahoo to have their subscribers instantly message their “buddies” on the AOL list without first joining AOL.

Yet, while blocking the access of Microsoft and Yahoo to that flow of information, AOL has felt no compunction about demanding that government provide “open access” to broadband cable. Flipping the argument, AOL argues that it must have untrammeled free access to the subscribers of expanded cable services in which Microsoft is a big player.

In cities across the nation, AOL feigns vulnerability while conducting a massively financed lobbying campaign to get local governments to force AOL’s presence on the systems of cable operators. At the same time, this huge multinational company, which recently toyed with the idea of buying CBS, is a ruthless opponent of any competition to its immensely profitable and rapidly expanding hold as the key portal to the online world.

While cheering on the Justice Department’s antitrust assault on Microsoft in the name of preserving competition, AOL had no compunction about swallowing CompuServe, a chief rival that preceded it as a content-rich service provider. The Justice Department didn’t seem the least bit concerned with this loss of competitive choice.

So, too, with AOL’s acquisition of Netscape, the then-most-popular Web browser. Ironically, the government’s lawsuit against Microsoft was triggered by Netscape’s complaint that Microsoft was using its proprietary power over software to block the browser’s success; now AOL claims its proprietary software is being invaded by Microsoft and Yahoo.

The Justice Department continues to hound Microsoft with charges of unfair competition, and as a result of the courtroom assault by federal prosecutors, Bill Gates has been transformed from fair-haired boy to the man-everyone-loves-to-hate. But the rapidly expanding AOL empire, which in the last quarter doubled its profits from a year prior, has elicited no comparable sense of alarm from any branch of government.

Odd, since it’s AOL, the come-from-nowhere company, that now overwhelms the Internet as a content provider and, more important, as the preeminent gateway to what the politicians love to call the information superhighway. Subscribers may start out just using AOL to check their e-mail, but they spend on average 52 minutes a day peering through the AOL portal that defines their sense of reality as much as any other media source.

That is real power! AOL, more than any TV network or other media organization, gets to shape the table of contents for information that its viewers will presume is important. Who cares that Microsoft profits mightily from designing the main computer operating systems, or that newspaper columns are written on Microsoft Word instead of WordPerfect? Microsoft has proved a dismal failure as a content provider, while AOL owns and runs the main information mall.

AOL has established itself as the preeminent Internet news provider, navigator of Web traffic and conveyor of the Internet conversation through e-mail, instant messaging and chat rooms. It did this with a superior product in the marketplace. But it is hypocritical for AOL to now seek to fortify its profit position by enlisting the power of government to stifle competition.