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

GirlsDoPorn Defendants Ordered to Pay Victims $75.5 Million

A federal court has ordered former GirlsDoPorn owner Michael Pratt and his co-defendants in the GDP sex trafficking case to pay restitution totaling $75,568,283.47 to 106 victims.

SWR Data Publishes 'Clip Trend' Report

Adult industry market research outfit SWR Data has published a report on the performance of clip platforms and sales.

Another German Court Rejects Blocking Orders Against Pornhub, YouPorn

A German court has blocked the Rhineland-Palatinate Media Authority (MA RLP) from forcing telecom providers based within the court’s jurisdiction to cut off access to Aylo-owned adult sites Pornhub and YouPorn.

Ofcom Fines Kick Online Entertainment $1 Million for AV Noncompliance

U.K. media regulator Ofcom on Thursday fined Kick Online Entertainment 800,000 pounds (more than $1 million) for failing to implement age checks as required for compliance with the Online Safety Act.

FSC Details Legislative Outlook for 2026

The Free Speech Coalition (FSC) has laid out the legislative outlook for the industry in 2026.

AEBN Publishes Popular Searches by Country for December, January

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

Jim Austin Joins CrakRevenue Team

Online industry veteran and business strategist Jim Austin has been hired by CrakRevenue.

Judge Dismisses NCOSE-Backed Suits Against Adult Sites Over Kansas AV Law

A federal judge on Tuesday dismissed lawsuits brought against two adult websites in Kansas for alleged violations of the state’s age verification law.

Aylo/SWOP Panel Spotlights Creators' Struggle for Digital, Financial Rights

Aylo and Sex Workers Outreach Project (SWOP) Behind Bars presented, on Tuesday, an online panel on creators’ rights, debanking and deplatforming.

AV Bulletin: Canada, Italy, Australia Updates

Since the Supreme Court’s decision in Free Speech Coalition v. Paxton, more state age verification laws have been enacted around the United States, as well as proposed at the federal level and in other countries. This roundup provides an update on the latest news and developments on the age verification front as it impacts the adult industry.

Show More