AOL Time Warner’s recent talks with AT&T about a possible merger of the duo’s cable operations [WAMN: 25-Jul-01] have elicited an aggressive response from Microsoft.

The software titan is reportedly preparing to scupper any attempts by AOL TW to take over or buy a stake in AT&T Broadband, the largest US cable TV provider. Although Microsoft insists it does not want to buy the business itself, insiders say it is ready to use its financial clout to prompt alternative bids.

A merger between the AT&T unit and AOL TW’s own cable division (the second-largest in America) would create a business with around 29 million subscribers, some 40% of the US market. It would also hand AOL TW control of a leading means of internet delivery and pose a threat to Microsoft’s plans to expand into e-commerce, entertainment and information – not least with its WebTV technology.

Regardless of the outcome of the AT&T saga, further clashes are expected between AOL TW and Microsoft as the two vie for web supremacy.

News source: Financial Times