| Clash of the Titans |
2 June 2003
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AOL and Microsoft Settle; Be Afraid
AOL and Microsoft have settled their differences over Netscape and Explorer, their internet browsers. AOL needs the cash and Microsoft has found a way to kill of a competing technology. Make no mistake, by accommodating Microsoft, AOL will wind up dropping Netscape. The computer world is becoming more monolithic, and that is not good.
Since neither firm is a favorite among computer aficionados, it is easy to attack the arrangement, whereby Microsoft pays AOL $750 million in exchange for greater AOL compatibility with Microsoft products, as a technical disaster. However, the world has gotten by before with second-rate technology as the standard (VHS versus Betamax comes to mind).
However, the real problem is the concentration of power. While competing firms develop software and hardware that are often incompatible, firms with no competition rarely innovate. In computer technology, that will undermine the entire industry. So long as AOL and Microsoft were fighting each other, there was hope for innovation within these giants that would spread quickly given their client bases. Now, they have united to save the money and effort, and the consumer gets to pay.
There are other systems, e.g., Apple and Linux, but the days of computer revolution appears to be over. In part, this was inevitable since the industry was maturing. However, the other part is a convergence of interests (not an overt conspiracy) that puts the computing public behind shareholder value. It could have been avoided.