AOL-MICROSOFT TALKS
BREAK DOWN
While music was reportedly the deal buster, the two mammoths were also at odds over whether AOL's online service software would be bundled with Windows XP.
According to reports, Microsoft Windows VP Jim Allchin and AOLTW Online President Ray Oglethorpe agreed that they could not resolve key issues that had stalled discussions.
An agreement would have guaranteed that AOL software would ship with XP as it has with every other version Windows released in the past five years. The two companies had been in negotiations over a variety of issues related to Windows XP, the updated version of the software giant's operating system due out in October.
Sources said that the chief problem was Microsoft's demand that AOL use Microsoft's Windows Media Player, software that allows users to play music and video on their personal computers. AOL, which has a multiyear deal with Microsoft rival RealNetworks to use its RealPlayer software, refused.
"Ultimately, the negotiations ended not on issues between Microsoft and AOL per se, but because of Microsoft's desire to control music on the Internet," said Kenneth Lerer, an AOL Time Warner Exec VP. "This is all about music. It wasn't about software, wasn't about bundling, it wasn't about two companies disagreeing. It was about music on the Internet."
While AOL Time Warner and Microsoft had been divided over a number of issues, which had reportedly been negotiated, AOL Time Warner spokesman John Buckley said the inclusion of RealPlayer with the AOL service was the main issue that stopped negotiations.
"All the major issues between AOL and Microsoft had been largely worked out when the talks foundered on an issue that really isn't about AOL and Microsoft," Buckley said. "It was Microsoft's desire to try to have as much control of music on the Internet as possible."
But according to CNET, Microsoft spokesman Vivek Varma said no single issue led to the severing of negotiations. "We're disappointed the discussions between AOL and Microsoft ended without an agreement on a broad range of issues between them," he said. "While unable to conclude a broader view, we will continue our work to ensure the AOL service runs well on Windows XP."
