- guardian.co.uk, Wednesday 12 January 2000 01.33 GMT
AOL's $350bn merger with Time Warner (TW) should be scrutinised carefully by the anti-trust authorities to see whether it is good for the consumer. This is vital not just because the merger itself needs to be looked at but because success will trigger a surge of copy-cat mergers across the globe as media companies pay ever higher prices for remaining companies fearing they may be left behind in the race of the Titans. At issue is whether the world wide web - whose founding philosophy is free access and empowerment of the individual - should be dominated by huge media conglomerates or whether plurality is to be the ethos.
AOL's merger was greeted on the markets as a marriage made in heaven to exploit the convergence of computers, telephones and cable. This is because it merges AOL's subscription-driven gateway to the web (with 20m subscribers) with TW's entertainment archive and cable network - a vital asset when the web faces a "broadband" revolution offering high-capacity links to the home. AOL, which has had many ups and downs in its 15-year life, will be vulnerable without broadband during a period when its subscription-based web model could be challenged by free access.
This merger raises three big issues. First, whether size itself is good if there are no benefits to the consumer. Second, whether AOL will guarantee open access to competitors to its new cable assets. Third, whether there should be guidelines over what happens when media giants own both the conduit and the content sent down them. The problem is this: if there is to be open access to conduit and content then why is there such a pressing need for AOL and TW to merge. If there isn't, and the real motive is to restrict access in order to keep prices higher, then it is a serious matter. The markets are so smitten by an "internet company" (though actually AOL is a pre-web dial-up service) marrying old technology thereby justifying the inflated prices of web stocks that they haven't had time to consider the real world. Unless this is sorted out now the next giant merger and the one after will point to AOL/TW as a precedent to allow them through the regulatory hoops. It is difficult for net companies, let alone the regulators, to keep up with the dizzy pace of activity. Which is why we must pause in order to decide what sort of future we want and whether it should be moulded by consumers or big corporations.
