An 800-Pound Partnership

AOL and Microsoft are discussing a possible joint venture online. Possible options include merging MSN with AOL, combining advertising sales forces, and making the separate IM services interoperable. Other options loom large in the imagination.

More than 10 years ago, AOL rebuffed a buy offer from Microsoft cofounder Paul Allen, while AOL's Netscape was instrumental in inspiring the antitrust action taken against Microsoft just earlier this decade. So why is Microsoft interested in AOL now? Perhaps because... it's not flying as high as it once was? Is this Google fear, manifested?

Regardless of the companies' motivations, the partnership raises several intriguing issues. Many of us know how challenging it can be to work with an 800-pound partner — one everyone wants to align with, which doesn't really need to work with you, and ends up driving the deal. What happens when both partners are corporate behemoths and used to having their own way? What needs to happen for this to work well?

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  • Jonathan Carey

    as a aol user i find that the merge is a nessessary step towards a better, more operational online source. If this is true hackers will decrease in numbers, and a more child friendly system shall be accomplished.

  • Martin Tibbitts

    It is easy to look at AOL and MSN and cry that they are dying due to a lack of innovation. In many ways that is true. but AOL and MSN aren't about to start is no longer in their nature. Their cultures do not embrace real empowerment and the risk-taking cultures they had in their infancies.

    So what is a next best thing? If you can't grow the business, reduce costs. Two separate groups of customers who are given pretty much they same product. There is a dramatic opportunity to take best of both services and create a significantly better and more profitable service.

    Martin Tibbitts

  • roger fulton

    ok, my 2$- - merge heavy, good bye quick thinkers, hello squadrons of "yes" men be they in Wine country or not, open collars, Birkenstocks or not. Do it, thinking stops, meetings start, memos pile on top of memos, "yes, chief" over coffee, politics and protocol, check your brains at the door. If Google can keep it's small town Cool, think on the fly, it is ahead of the pack and will stay there.
    They can their underwear.
    Paul Allen is about owning the world.

  • Wil Schroter

    I agree, the mega mergers are not what is needed - it's the innovation. People quickly forget that Google is huge now but they were just a small upstart not very long ago. Companies like AOL should be placing their bets on more innovation companies, not bloated partnerships. At the Go BIG Network we're seeing tons of startups that are placing themselves way ahead of the curve.

  • Kurt Maddox

    Mergers don't create momentum or innovation, they create bigger version of the cultures already losing to a smaller and more innovative competitor. The merger also creates culture conflicts and integration issues that further impede their ability to match the competitive advantage of the competitor. Google operates in a blank slate world without the weight of legacy services and without the cold shower of turf protecting upper-mid-level executives who fear losing their budget allocation much more than they fear the competition.

    Having said all this, the joint venture/partial merger/whatever is good for consumers and should help both the MSN and AOL services remain relevant in the marketplace.