Microsoft Corp and AOL Time Warner Inc said they will stop bundling America Online software with the Windows operating system after the two companies ended talks that began six weeks ago.
Microsoft, the biggest software company, will stop distributing AOL software with Windows when a new version of the product goes on sale in October. One of the key stumbling blocks was a dispute over whether AOL would let customers access audio and video over its Internet service coded in a digital format championed by Microsoft.
The talks collapsed at a time when Microsoft is boosting investment in MSN, a unit the software maker has built into the world's second-largest Internet service provider after AOL. MSN recently offered discounts to America Online customers when AOL raised rates. Cancellation of the bundling agreement might cause some people to choose MSN because they won't look beyond their personal computer's pre-installed software to find an online service.
"This is going to make things more difficult for AOL," said Christian Koch, an analyst with Trusco Capital Management, which holds shares in Microsoft and doesn't own stock in AOL. "Having your product bundled with Windows is a big deal."
About 95 percent of the world's personal computers run on Microsoft's Windows operating system. AOL has 29 million members, up from 5 million when it started bundling its software with Windows.
America Online has played down concerns that ending the agreement will hurt its sales. The company "doesn't really use the desktop to get consumers," AOL Chairman Barry Schuler said Tuesday. "If we have a deal with them, that's great. If not, that's fine." The companies said they decided to abandon the talks today during a phone call between Microsoft Vice President Jim Allchin and America Online President Raymond Oglethorpe.
Microsoft officials wouldn't comment on the reason that the talks failed.
AOL blamed the failure of the negotiations on a dispute over deployment of rival digital music-and-video formats. AOL uses Real Networks Inc.'s Real Player and Microsoft wanted to let AOL users access its Media Player format.
The talks broke down over "Microsoft's insistence on gaining control of music on the Internet in a way that is similar to their control of operating systems on the desktop computer," said AOL spokesman John Buckley.
While Buckley wouldn't elaborate on the issue, an AOL official who spoke on condition of anonymity said that Microsoft demanded that its Windows Media Player be easier for AOL customers to access than the Real Networks digital music player. The AOL official said the company had agreed to make its video and music content accessible to users of the Windows Media Player.
Microsoft spokesman Vivek Varma wouldn't comment on the media player or other issues that came up in the negotiations.
A Microsoft official who spoke on condition of anonymity said that the software maker hadn't demanded that Media Player get preferential positioning on the AOL desktop. The Microsoft official said that AOL insisted that Time-Warner content be accessible only with the Real Player.
The AOL official who declined to be identified said the company had also agreed to a provision that would bar it from bringing antitrust claims against Microsoft over Windows XP during the term of the distribution agreement. The Microsoft official said no such agreement had been reached and that AOL insisted it has a right to sue for damages from Microsoft to Netscape.
The talks broke down as Microsoft is rushing to complete the final coding for Windows XP, a version of its operating system that's in the final stages of user testing. The product is on a tight production schedule so it can be released on Oct. 25, just before the start of the crucial holiday shopping season.
Microsoft has said it plans to bundle Windows XP with an Internet phone, video conferencing program and instant messaging software. It will also enable computer users to send messages from PCs to cellular phones and hand-held computers.
The negotiations exposed deep differences between the world's No. 1 software maker and the media giant.
Besides the dispute over digital media formats, Microsoft also sought a guarantee that AOL-Time Warner wouldn't lobby lawmakers, complain to antitrust enforcers or bring legal claims alleging that Windows XP violated antitrust laws, according to people familiar with the talks.
The partnership is breaking down at a time when Microsoft is developing new services on the Internet under an initiative that it's dubbed ".Net" The .Net strategy will boost competition between Microsoft and AOL-Time Warner as they race to exploit the potential of electronic commerce on the Internet.
Microsoft has developed Windows XP based on the assumption that that a US appeals court won't restrict its ability to bundle new features into the PC operating system.
Microsoft appealed a federal judge's order that it be broken into two companies for illegally defending its Windows monopoly.
It also appealed US District Judge Thomas Penfield Jackson's finding that it violated antitrust laws by bundling the Internet Explorer web browser into Windows to foil competition from Netscape Communications Corp, now part of AOL-Time Warner.
The appeals court, which previously ruled in Microsoft's favor on the bundling issue, could issue its ruling any day.
Among the issues in the talks was Microsoft's demand that AOL-Time Warner give up its right to sue the software giant for damages to Netscape. Jackson had found that Microsoft sought to push Netscape's Navigator Web browser out of the market by bundling a free copy of Internet Explorer into Windows.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique