This story was written by Keith Dawson for the Industry Standard's Media Grok email newsletter. It is archived here for informational purposes only because The Standard's site is no more. This material is Copyright 1999-2001 by Standard Media.

Whose Desktop Is It, Anyway?

Jun 04 2001 10:25 AM PDT

AOL and Microsoft watch each other warily from across the negotiating table, and many of the sticking points are on your screen.

Over the weekend and today, everybody went high with stories about the AOL-Microsoft (MSFT) talks. They're off. No, they're back on. You could find support for any theory you liked, amid all the leaking and the spinning.

The Washington Post (WPO)'s Saturday story said that the talks had broken down on Friday, and it outlined some of the possible reasons for the rift. The paper cited a theory that the sticking point was Microsoft's desire that AOL make its Instant Messaging service compatible with Microsoft's. Another version claimed that Microsoft wanted AOL to sign an exclusive deal to use its Media Player, locking out rival RealNetworks (RNWK), the media solution now used by AOL. The Post's reporter was skeptical of both explanations of why the talks tanked.

Today's stories all noted that the talks had resumed over the weekend. The Wall Street Journal explored some of the nuances in the giants' relationship with an explanation of how Microsoft is changing what it means to be "on the desktop." It seems the company's new Windows XP, to be released in the fall, will boot up initially without the familiar scatter of icons on the desktop. Users will be able to add icons, according to the Journal, but a new program called "the sweeper" will ask them periodically if they want to remove the less frequently used ones. Microsoft's detailed control over the user's experience prompted AOL to tell lawmakers recently that Windows XP is "anti-innovation, anti-consumer and anti-competitive," according to the Journal.

Writing in the New York Times (NYT), John Markoff updated the story with the help of his own anonymous sources, who told him that Microsoft had been "trying to persuade AOL to agree not to lobby against Microsoft in current or future court battles," but that AOL is "holding open the possibility of pursuing (antitrust) action" against Microsoft if the talks break down. No-namers inside AOL told Markoff that the media giant has grown increasingly concerned of late over Microsoft's Dot-Net strategy and its plans for Hailstorm, a technology intended to aggregate consumers' personal information and transactions. Markoff concluded with a review of the Internet appliance that AOL had once planned to introduce. Markoff quoted another no-namer who said that AOL has "backed off on that and decided not to compete and to come in through the living room instead."