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

UK Parliamentary Group Calls for Outlawing Cam Platforms

The U.K. Parliament’s All-Party Parliamentary Group (APPG) on Commercial Sexual Exploitation has published a report in which it calls for banning adult livestreaming platforms.

Ofcom Escalates Sun Social, Superb Convert Investigations

U.K. media regulator Ofcom has ramped up its ongoing Online Safety Act (OSA) compliance investigations into PlayVids/PeekVids operator Sun Social Media and PimpBunny operator Superb Convert.

Centrobill Rolls Out Apple Pay, Google Pay Options

Centrobill has added Apple Pay and Google Pay options for merchants.

Judge Preliminarily Approves Pornhub Class Action Settlement

A U.S. District Court judge on Monday granted preliminary approval to a settlement between Aylo and the plaintiffs in two class-action lawsuits over allegations that former Pornhub parent company MindGeek knowingly allowed and profited from CSAM on its sites.

Roald Riepen Steps Down as CEO of IMC

Roald Riepen, CEO of International Media Company (IMC), is stepping down.

Ofcom Sets Timeline for Enforcing 'Extreme' Content Rules

Before U.K. media regulator Ofcom begins enforcing new laws criminalizing certain “extreme” adult content online, it will first hold a consultation in early 2027, and then provide updated guidance for sites and platforms.

FSC Publishes Guidance on New UK Pornography Laws

The Free Speech Coalition (FSC) has published information for its members on the United Kingdom's recently passed pornography laws, which take effect next week.

Brazil Issues Guide to Digital Safety Compliance

Brazil’s National Data Protection Agency (ANPD) published on Wednesday a new guide outlining online providers’ child-protection responsibilities under the Digital Statute for Children and Adolescents (Digital ECA), which requires adult websites to age-verify users located in Brazil.

AEBN Publishes Popular Searches by Country for August, September

AEBN has released the list of popular searches from its straight and gay theaters, by country, for August and September.

2027 XBIZ Exec Awards Nominees Announced for Adult Entertainment Edition

XBIZ is pleased to announce the nominees for the adult entertainment industry edition of the 2027 XBIZ Exec Awards, set to be presented as part of the annual XBIZ Honors ceremony on Friday, Jan. 8, in conjunction with the XBIZ 2027 event series.

Show More