August 21, 2003, 11:01 AM — The U.S. Federal Communications Commission (FCC) has lifted a restriction preventing AOL Time Warner Inc. (AOLTW) from offering streaming video services over its instant messaging software, after deciding that there was no danger of the company dominating the current market.
The restriction "no longer serves the public interest, convenience, or necessity," the FCC wrote in a decision released Wednesday. The agency noted that AOLTW competitors such as Yahoo Inc. and Microsoft Corp. have gained ground in the instant messaging (IM) market and have introduced their own advanced video services over IM.
"We are pleased that the FCC lifted the restriction on AOL's ability to offer consumers advanced instant messaging services. The FCC clearly recognized that text-based instant messaging today is highly competitive," AOLTW spokeswoman Tricia Primrose said in an e-mail.
The FCC imposed the restriction as a condition of America Online Inc.'s January 2001 marriage with Time Warner Inc. because it feared that AOL's dominance in text-based messaging combined with Time Warner's cable and programming assets would give the merged company an unfair advantage in the advanced IM services market.
The agency said that AOLTW must ensure sever-to-server interoperability between its advanced IM services and competitors, or seek relief by showing that the condition no longer serves the public interest or necessity.
Earlier this year, AOLTW applied for relief from the condition, arguing that not only was there was no danger of it dominating the market, but that consumers were losing out by being denied competition among all of the leading IM providers.
Since the merger, AOL's Instant Messenger (AIM) has actually lost ground in the market, the FCC noted, showing healthy competition in the market.
"The fact that AOL Time Warner's market share is decreasing in a growing market, combined with the fact that two nontrivial competitors -- Microsoft and Yahoo -- have established stable and growing market shares, directly contravenes the theory that the market is tipping toward AOL Time Warner," FCC Chairman Michael K. Powell said in a statement.
Powell added that he disagreed with imposing the condition in the first place.
According to Primrose, AOL now expects to "fully compete in advanced IM services."