Almost 10 years ago, I wrote an article for TidBITS called "The Experiment Is Over" about the end of the governmentally funded, usage-restricted Internet backbone. The Internet’s experimental age, during which the government and research institutions built, connected, and paid for the Internet, was replaced by the commercial age, in which large-scale businesses charged for infrastructure and feeds.
Today, we’re seeing the end of the second experiment: multiple companies offering Internet service to individuals. Early this morning, an announcement reported that Microsoft was successful in a purchase deal to buy AOL’s entire operations, confirming a rumor that the companies were in talks about an acquisition. Separately, the company also managed to buy the now-profitable EarthLink, which Microsoft had courted several years back, as well as several other major ISPs. Microsoft already owns a portion of the cable ISP Road Runner, and provides Internet service to about nine million subscribers via MSN.
In the short term, it seems likely that the cost of Internet access will drop, as Microsoft applies economies of scale after merging the operations of these large ISPs. That, however, will bring into question the survival of the remaining small, regional ISPs that make up the remainder of the market after Microsoft’s 69 percent share, which is of course backed by Microsoft’s marketing muscle and infinitely deep pockets. MSN, for instance, reported its first profitable quarter in the third quarter of 2003 after eight years of red ink.
The U.S. Justice Department, drained of staff and funding by previous unsuccessful battles with Microsoft, has already pledged to not fight the effort. A spokesperson said, "With so many independent ISPs competing Microsoft throughout the United States, we see no antitrust concerns with Microsoft’s recent acquisitions." The European Union, which recently found Microsoft guilty of antitrust violations, is said to be watching Microsoft’s actions in the U.S. ISP space carefully. Finally, the U.S. Federal Trade Commission issued a statement saying that "it’s in the best interests of consumers to have a single entity that can better fight spam centrally."
In the longer term, we expect costs to rise, probably not directly, but through service bundles, much the way cable companies package channels in such a way that you end up paying for far more channels than you’d ever watch. More concerning, though, is the increased vulnerability of an Internet that’s in effect run by Microsoft. Biological monocultures are prone to population crashes due to pests, disease, or environmental change, and the same is proving equally true in the computer world. With reduced variability in operating systems and operating practices among large ISPs, much larger portions of the Internet could be affected by malicious code aimed at Microsoft-specific software or systems.