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Yahoo, Microsoft Test IM Interoperability

Users of Windows Live Messenger and Yahoo Messenger will be able to IM each other in a limited test phase, designed to ensure that the networks can handle the combined accounts of approximately 350 million worldwide.

Yahoo Inc. and Microsoft Corp. on Thursday said they have opened their instant-messaging networks to each other in a limited public test.

The two companies will begin by offering up the new open messaging networks to users with the latest version of Windows Live Messenger and Yahoo Messenger. This test phase is meant to ensure the networks can handle the combined accounts of approximately 350 million worldwide, the companies said in a statement.

Last year, Yahoo and Microsoft agreed to connect users of their instant-messaging services worldwide. The announcement followed Google Inc.'s launch of Google Talk, which is based on an open standard and has about 811,000 users.

Partnerships and joint ventures have become the preferred business model for Internet tech companies. "The enemy of my enemy is now my friend," said Michael Gartenberg vice president and research director at Jupiter Research. "With new services coming to market, such as Skype and Google Talk, the ability to maintain interoperability is another reason to remain open and form these types of partnerships."

Yahoo and eBay in May announced a multiyear partnership to help Web users easily connect with the two companies, squashing speculation Microsoft had tried to buy Yahoo.

Soleil-Fulcrum Research senior Internet analyst Laura Martin said combining Yahoo and Microsoft's instant messaging creates a viable competitor to AOL Inc.'s IM service. "The more people who use the network the more valuable the service," she said. "We are seeing more companies forming partnerships."

Combining users creates loyalty. Companies that can reach the majority of uses can typically command a bigger chunk of advertising dollars. Strategically, it becomes best to partner with a competitor, Martin said.

The combination of Yahoo and Microsoft puts pressure on instant message leader AOL. According to market research firm Nielsen//Netratings, AOL took the No. 1 spot last month for instant messaging services in the United States with 47 million users, Microsoft's MSN Messenger and Windows Live Messenger combined followed with 28 million, and Yahoo ranked No. 3 with 22 million users.

Microsoft and Yahoo will initially trial the program in Argentina, Australia, Brazil, Canada, China, France, Germany, Hong Kong, India, Italy, Korea, Mexico, Netherlands, Singapore, Spain, Taiwan, Turkey, the U.K. and the U.S.

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