MSN Splits Into Two Divisions

REDMOND, Wash. -- Microsoft Corp. announced plans this week to split its MSN division into a software unit and a communications unit.

The decision reportedly comes on the heels of a growing MSN deficit, $92 million to be exact, as reported in Microsoft's latest quarter, and the increasing belief that MSN is an effective online portal, but that its failure as an Internet Service Provider (ISP) has been too costly.

MSN was originally created in 1995 to eclipse AOL's control of the dial-up Internet market, although it was never able to compete with the Time Warner division and instead fell into a long line of similar, second-rate ISPs.

MSN also managed to transform itself into an online portal that attracted volumes of subscribers, but it was never able to even skim the surface of AOL's monopoly.

As the popularity of high-speed Internet access took hold, MSN began to slip even farther behind its competitor and failed to maintain necessary profit margins.

According to reports, even a $300 million marketing campaign last year couldn't save the division, and it soon lost an estimated 400,000 subscribers to other services.

Research firm IDC predicted earlier this year that Microsoft would eventually sell off its meager portion of the Internet market to another service provider, and in many ways, reports out of Redmond suggest a similar move.

While MSN will still keep one foot in the dial-up business, Microsoft intends to more directly target the riches of the broadband telecommunications industry.

According to Microsoft, it will divide MSN's communications services, which includes its dial-up and DSL services, Hotmail, Passport, and MSN Messenger, and MSN's information services, which includes the MSN portal, search functions, and ecommerce.

Microsoft has appointed Yusuf Mehdi to helm operations on the software side and Blake Irving as head of the communications side. Mehdi will also head up Microsoft's attempts to create an online music store and further its web search technology.

In September of this year, Microsoft shut down all of its unmoderated MSN chat rooms in 28 countries worldwide, including Europe, the Middle East, Africa, Asia, and parts of Latin America.

At the time, Microsoft said it was trying to curb the amount of illegal activity and adult content that circulated through those chat rooms. The company also stated that its decision was based on legal issues and a persistent drain on company resources.

Copyright © 2026 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More News

AV Bulletin: Loopholes and Lawsuits

This roundup provides an update on the latest news and developments on the age verification front as it impacts the adult industry.

Utah 'Porn Tax' Bill Will Head to Governor's Desk

A bill that would tax adult websites and make them liable if minors circumvent geolocation has passed the Utah state legislature and will soon head to the office of Gov. Spencer Cox for signature or veto.

Flirt4Free Co-Founder Gregory Clayman Passes Away

Gregory Clayman, a pioneering figure in the live cam sector and cofounder of the long-running webcam platform Flirt4Free, has passed away.

Pornhub to Restrict Access in Australia as AV Rules Take Effect

Pornhub parent company Aylo will restrict access to its free video-sharing platforms in Australia in response to new age verification regulations, the company confirmed Thursday.

ASACP Announces F2F as 1st Gold Sponsor

The Association of Sites Advocating Child Protection (ASACP) has announced Friends2Follow (F2F) has upgraded its sponsorship and become the organization’s first Gold Sponsor.

House Committee Approves Online Safety Bill With Federal AV Requirement

The U.S. House of Representatives Committee on Energy and Commerce on Thursday passed the Kids Internet and Digital Safety (KIDS) Act, which includes provisions to make age verification by adult websites federal law.

Segpay Adds 'Pay by Bank (UK)' Payment Solution

Segpay has added the Pay by Bank (UK) option to its direct payments solutions.

Creator Verification Platform 'VerifiedCollab' Launches

Performer Eli Thomas has launched VerifiedCollab, a verification platform for creators and producers.

House Committee to Weigh Online Safety Bill With Federal AV Requirement

The U.S. House of Representatives Committee on Energy and Commerce will meet Thursday to consider and potentially amend the Kids Internet and Digital Safety (KIDS) Act, which includes provisions to make age verification by adult websites federal law.

Show More