Microsoft Corp. and Yahoo Inc. are preparing to link together their free instant messaging services as they take on entrenched messaging leader AOL and market newcomer Google Inc., a source close to the companies said on condition of anonymity.
The deal, the first major alliance between two of the Web’s main providers of instant messaging, will allow users of Microsoft’s MSN Messenger service and Yahoo Messenger to swap instantaneous text messages with each other.
The tie-up, expected to be announced before long, will also give users of both services the ability to communicate via voice as well, a feature that up to now has been restricted to users within each service, the source said.
This heralds a new way for customers to create closer communities, said MSN vice-president Blake Irving. We believe this is one of those situations where one plus one equals three.
A Microsoft spokeswoman and a Yahoo spokeswoman declined to comment on the alliance, first reported by the Wall Street Journal.
Instant-messaging services are becoming increasingly vital, not just as social lifelines for young people but also in the business world. Their providers are adding video chatting and Internet telephone functions, and Google Inc. entered the arena in September with a service of its own that includes voice chat.
AOL, a unit of Time Warner Inc. is currently the market leader in the instant messaging space with a share of 56 percent, according to research firm Radicati Group.
AOL’s instant-messaging product, AIM, had some 51.5 million unique U.S. users in September, compared to about 27.3 million for the competing MSN Messenger and 21.9 million for Yahoo’s Messenger, according to Nielsen/NetRatings.
But with Microsoft and Yahoo making up the rest of the market, their combined service could be a formidable threat to AOL. Google launched its own instant messenger, which includes Internet voice calling, in August.
Up until now, AOL has been able to pick and choose its partners, command the royalties it wants, said Robert Mahowald, an analyst with research firm IDC. They have moved to develop this market at their own pace. This forces them to take a more aggressive stance.
At stake is the ability to attract users and offer them other services and information from the Web portals, which in turn helps Microsoft’s MSN Internet unit, Yahoo and AOL earn advertising dollars.
Alongside the opportunity to send messages to users of each other’s services, the deal between Yahoo! and MSN will enable customers to use their computers to make phone calls to other members, a service that employs a currently fashionable technology known as voice over internet protocol (VoIP). Google recently announced plans to launch a similar service but its customers will only be able to call users of its GoogleTalk IM service.
Google and AOL are understood to have been involved in the early discussions about interoperability but Yahoo! and Microsoft are believed to have gone it alone because they felt they could get a service off the ground more quickly.
Other instant messaging products, such as Trillian, allow people to send and receive messages from multiple messengers.
Redmond-based Microsoft has long sought to forge some sort of deal to boost the profile of MSN Messenger. The company also has been in talks with AOL over possible partnerships with Microsoft’s MSN online unit, although it’s not clear where those talks stand now.
Microsoft has already opened up its corporate online messaging service, which requires a license and offers more features, to AOL and Yahoo. Unlike free messaging services, corporate messaging lets businesses install instant messaging within corporate networks, where conversations can be monitored and saved, much like enterprise e-mail.
Microsoft, Yahoo and AOL, a division of Time Warner, Inc., all declined to comment.