RealNames calls it quits, blames Microsoft

May 13, 2002 —

RealNames Corp. is shutting down and will end its Internet keyword navigation service on June 28. The Redwood City, California, company blames Microsoft Corp. for its failure.

Microsoft won't renew a 2-year-old contract to resolve keywords in Internet Explorer, the Web browser used by most Internet users, said Keith Teare, RealNames' founder and chief executive officer in a statement on his personal Web site http://www.teare.com/.

Eighty RealNames employees were laid off Friday after Microsoft told RealNames earlier in the week that it would not renew its contract, Teare wrote. Without support in Internet Explorer, the keywords won't work.

RealNames, founded in 1996, set out to simplify navigating the Web by replacing Web addresses, or URLs (Uniform Resource Locators), with keywords. Rights to keywords were sold by RealNames and partners around the globe. Keywords were used about 500 million times in the first quarter of this year, Teare wrote.

Webeffekt AG in Dinslaken, Germany, a European RealNames partner, confirmed the end of RealNames. The company was informed via e-mail on Monday morning.

"The information we got is that the cooperation between RealNames and Microsoft will end," said Robert Biermann, general manager of Webeffekt. "I am not sure what the effect on our business will be. We expect some angry customers. Also, we invested in a platform to register keywords. It was all a waste of time."

Under the March 2000 contract, Microsoft was given 20 percent of RealNames stock and US$15 million in cash. An additional $25 million was due this month. RealNames could not afford this, but proposed a new agreement. However, control, not money, was the issue, Teare wrote in his statement.

"Microsoft dislike(s) the product because they cannot control it," he wrote. " A small private company is being denied an audience -- not because of money -- but because of fear of losing control." Teare claims that Microsoft is now working on its own keyword navigation system.

Nobody at Microsoft could immediately be reached for comment.

ITworld.com