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Published on Tuesday, April 4, 2000 in the Los ANgeles Times
While The Focus Is On Microsoft, It's The Megamerger Of America Online And Time-Warner That's Scary
by Robert Scheer
While the Justice Department now has had its way with Microsoft, one has to wonder if government lawyers have ever heard of another rather large company called America Online. Surely the reason for breaking up huge companies ought to have something to do with the power those companies wield over our lives. But if that's the concern, AOL has amassed a power that Bill Gates can only dream about.

Despite the unparalleled control over mass media in America represented by AOL's merger with Time-Warner, there seems to be no concern at the Justice Department that AOL's bigness represents a threat to the free market in that most important commodity of all--ideas.

Even before its acquisition of America's premier old media conglomerate--at $184 billion, the largest ever--AOL represented the main portal to news, financial services and entertainment on the Internet for 22 million families. Not only does AOL guide those people to what's important on the Net, but the company obtains enormous personal data on its members. Perhaps for that reason, it has joined the financial services industry in fighting attempts to protect consumer privacy.

Last year, in a major assault on privacy that involved the most expensive lobbying effort in U.S. history, Congress passed the Financial Services Modernization Act, which for the first time in 65 years allowed banks, insurance companies and stockbrokers to affiliate and to share personal records of consumers among themselves without obtaining permission from those consumers.

A loophole in that bill specified that if state law provided a more stringent privacy protection, it would supersede the new federal law. But legislation (AB 1707) introduced in California by Assemblywoman Sheila Kuehl (D-Santa Monica) to provide better protections to consumers than federal law has run into fierce opposition from AOL and its subsidiary, Netscape Communications. AOL and Netscape are lobbying against what their lobbyist called "opt-in systems [which] require companies that use personal information . . . to obtain each customer's express consent" before sharing that information with others.

What AOL represents is the classic threat of a huge conglomerate that wields its power and influence across the broad swath of the commercial and social aspects of our lives. AOL more than any company in America has the power to shape our consciousness.

What irony that Microsoft's alleged stifling of Netscape was key to the Justice Department's case, but no one seems to mind that AOL bought Netscape and has reduced it to a compliant subsidiary carrying AOL's corporate water. Adding insult to injury, Netscape users on Saturday were informed that they would have to change their online addresses in order to fit into AOL's worldwide operation. Yes, Big Brother requires you to change your name.

Before gobbling up Netscape, AOL bought CompuServe, its major online competitor, which is now hardly heard from as an alternative portal to the Web while it was once preeminent as the guide to the world of magazine and newspaper news available through the Net.

The government has focused on Microsoft, which has proved feeble at providing Web content and therefore represents little threat to free choice of information so vital to a democracy. But AOL has succeeded precisely because it is so effective in marketing content, including, most important, the news on which a free citizenry relies. Even before its acquisition of the Time-Warner media empire, AOL was the No. 1 source for news on the Web. CNN, which AOL picked up in the Time-Warner deal, is the 10th most important.

Never in the history of news publishing has one company held such extensive power over what we see and hear as does AOL in the wake of the Time-Warner deal. Nor is it a matter of merely dominating the all-important U.S. market. Obviously, Time-Warner has a major impact on the world's culture through movies and television in addition to print. And now, AOL is clearly contending for worldwide dominance. In a $8.2-billion deal to gain full control of AOL Europe and AOL Australia, AOL last month bought out the 50% interest in those joint ventures of its partner, Germany's Bertelsmann group, the world's biggest book publisher.

If antitrust law does not speak to the threat that AOL represents over the entire range of our culture, then it is in desperate need of revision. Microsoft's control over its Windows operating system may have inconvenienced some software competitors, but AOL's acquisition of formerly competing media outlets is destructive of the free marketplace of ideas.

Perhaps because of AOL's emerging dominance, the news media, which have been scathing in their treatment of Microsoft, seem to have barely covered the potential threat of AOL. How long will the journalists and the government ignore the fact that in the new world of the information age, the specter of Big Brother is represented not by Microsoft but rather by AOL.

Copyright 2000 Los Angeles Times


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