PR Goes Splat Over MSN Chat

Anyone in the MSN free lunch line may want to start looking at Yahoo! or another competitor. In yet another stab at charging consumers for MSN services, Microsoft soon will require consumers to pay for chat. The change means that Microsoft basically will shut down Web-based chat in the majority of the 34 countries it serves. In the United States, Microsoft plans to bring the chat service inside its paid MSN online service.

The company states that only paying customers that give MSN a credit card number would be able to participate in unmonitored chats. The stated reason: To be able to identify and, presumably, curtail what Microsoft considers offensive behavior and to cut down on spam.

Sometimes, I just don’t understand Microsoft. By itself, the move to paid chat is fodder for negative press stories and stinging commentaries from the sharpest critics of Microsoft’s Internet strategy. The stated reason for the change is a loaded gun waiting to go off in Microsoft’s face; it’s the worst kind of well-intended public relations gone awry.

The whole point of chat is anonymity, and this is a longstanding Internet tradition. (Of course, it could be argued that tradition no longer makes sense in 2003.) More importantly, even the suggestion that the company might identify chatters through credit card information carries HUGE privacy implications for which the company could get rapped by customers, competitors, privacy groups and even federal regulators. I’m no legal expert, but I do know it’s been about a year since Microsoft settled a privacy complaint with the U.S. Federal Trade Commission. Those allegations involved Passport, the authentication service used by MSN.

Worse, the secondary implication is that Microsoft identifies--or could, anyway--chatters that today are subscribers to the MSN online service.

Microsoft gives very bad reasons why MSN will be charging for unmonitored chat, a change that starts on Oct. 14. From my perspective, these aren’t even the more important reasons for the change in policy, which makes the bad PR positioning all the more egregious and unnecessarily damaging to the company.

My take on the most important reason: Microsoft has been on a long track of taking free MSN services and charging money for them. Case in point: The move in May to end free calendaring.

This strategy’s roots go back to March 2001, when Microsoft announced an ambitious plan to deliver 14 ala carte Web services under the moniker HailStorm. But by early 2002, that plan--renamed .Net My Services--had run aground. Microsoft rightly concluded that consumers weren’t ready for the planned Web services and that the company lacked the institutional expertise to deliver them.

So, Microsoft decided to chuck the HailStorm remnants into MSN 8, which launched in late October 2002. The strategy started MSN’s shift away from giving lots of Web-based consumer services away for free to charging for them. From that perspective, charging for chat is just part of an ongoing strategy. MSN is a money-losing Microsoft division; it makes sense the company would want to charge customers for services.

I don’t know why Microsoft doesn’t just say exactly what the reason is--that’s assuming I know a hoot what I’m stating. The whole credit card/identification explanation looks like good PR--protecting the kids from predators and all--but really sends an unintended message to the well-meaning majority. Too many people suspect Microsoft collects information about them, even though there is absolutely no evidence that justifies this belief.

For anyone doubting this paranoid view of Microsoft is true, I would suggest logging into a chat room. Ah, that’s right, Microsoft will be charging for the chat.

Posted by Joe Wilcox at September 23, 2003 07:13 PM