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MSN's Smart Move on Anonymous Chat

By Alex Salkever On Sept. 24 word got out that Microsoft (MSFT) planned to shutter popular Internet chat rooms run by its MSN online service. After Oct. 14 all chat rooms would be open only to paying MSN subscribers on the theory that screening out the nonpaying riff-raff would discourage undesirables responsible for a growing stack of complaints, mainly for unsolicited cyber-sexual approaches. The Colossus of Redmond claimed it couldn't adequately police its myriad chat rooms to keep out pedophiles preying on younger Web surfers.

This decision elicited a chorus of boos and hisses from critics and guffaws from other chat-room operators such as Yahoo! (YHOO) and Lycos U.K. (the British subsidiary of Web giant Terra Lycos (TRLY)), both of which have no plans to shut down their current chat rooms. The critics contend that Microsoft's unwillingness to properly moderate chat rooms amounts to denying its customers a valuable service. They also claim the real reason it plans to scuttle the freewheeling chat rooms open to all comers is a capitulation to bottom-line pressures. The other chat-room operators say it's perfectly possible to police chat effectively and economically.

I've criticized Microsoft in the past on numerous issues. On this one, though, I have to say the critics need to get a grip. Let's do a quick rundown. They insist that MSN should maintain a service that has all the hallmarks of a litigation magnet (ask the Catholic Church about that) to benefit nonpaying, largely anonymous customers. Or that Microsoft is focused only on dollars and cents in refusing to accept more costs for policing and regularly cleaning up a portion of a business unit that has never made any money. These are pretty rich claims, as is the one by Lycos U.K. and Yahoo that they can police their rooms.

CHEESY PITCHES. First, I doubt that dumping anonymous, unpaid chat will hurt paying customers. Here, Microsoft is actually following a trend away from services that make it easy and convenient to participate anonymously in Web interactions. The unholy troika of increasingly offensive spam, unsolicited instant-message come-ons, and cheesy chat-room sales pitches by unscrupulous hucksters is driving honest Web users crazy.

How crazy? Friendster, an Internet chat and social service that allows people in only by invitation, is the fastest-growing service of its ilk in history (see BW Online, 6/10/03, "Finding Love Online, Version 2.0"). With no advertising, it has attracted 1.7 million beta subscribers in six months, mainly due to its promise of not allowing random wingnuts and sex freaks to run wild through system. By comparison, user rolls for chat rooms at the big portals are growing very slowly, if at all, as more services, such as Friendster, directed toward specific interest groups grab more and more participants.

Here's another contention: Closing chat rooms will send teenagers into the arms of lightly policed IRC (Internet relay chat) systems where hard-core pedophiles lurk. I say that's bunk. For the average user, IRC remains hard to figure out. It's more likely that kids will build groups through more extensive use of the latest instant-messenging clients that, by the way, are more difficult to access and subvert anonymously than chat rooms. Unlike in chat rooms, you need permission to join an IM conversation, and IM users can refuse messages from anyone they don't know or like.

FRIENDS OF DIAPERED LADIES. Microsoft is also correct in saying it's virtually impossible to effectively police anonymous chat rooms. At any given time, MSN has literally hundreds of thousands of chat groups going. Their variety is eye-opening. You can find them for folks who are Ford Mustang devotees and for people with the predilection for pictures of grown women wearing diapers (I'm not making that up). Gay sex, straight sex, mixed sex, and lots of other variations are all well represented.

Groups with sexual themes also jump the tracks out of the personals section into other areas that would seem far more innocuous. Clearly these groups are fluid, with titles changing regularly.

So how much manpower would it take to police such a chaotic place? I would guess into the thousands of employees to do a really good job. In several published articles, Lycos U.K. claimed it needed 97 moderators to monitor 100,000 regular chat-room visitors. By some estimates, MSN has 4 million regular chat-room visitors. That's about 40 times Lycos U.K.'s size.

FOLLOWING AOL'S LEAD. Some quick math implies that Microsoft would need nearly 4,000 employees to police its chat rooms well, as Lycos U.K. claims it does. Adding those bodies would boost overall headcount 8% at Redmond. Even supposing the low-low-rate total employment cost of $40,000 per person per year, that would mean additional labor costs alone of $160 million, not including overhead. All for a business unit that has yet to make a dime of real profit. If that's bottom-line capitulation, then sign me up.

The true sniff test for me in this complaint is America Online (AOL). Long ago, the No. 1 online service closed off the key portions of its chat areas to nonpaying members. Initially, it was met with complaints, but now it's part of the price of using AOL.

The Microsoft bashers in this case conveniently ignore the fact that AOL, which probably has 8 to 10 times as many chat users as MSN, has adopted way back when the exact stance the Microsoft is now taking. Oh, and by the way AOL is the only service provider that's making a big profit (Yahoo is profitable but far less so than AOL).

Free is dead on the Net, and Microsoft's critics should learn to live with it. is Technology editor for BusinessWeek Online

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