From the AP via MSNBC:
Microsoft Corp. and Yahoo Inc. have agreed to make their two instant-messaging programs work together, a partnership that could threaten market leader America Online, people familiar with the situation said.
The deal was expected to be announced early Wednesday, these people told The Associated Press.
A Yahoo-Microsoft partnership, allowing users of the competing services to exchange messages seamlessly, would give the two companies nearly as many users combined as AOL has in total.
AOL’s instant-messaging product, AIM, had some 51.5 million unique U.S. users in September, compared to about 27.3 million for the competing MSN Messenger and 21.9 million for Yahoo’s Messenger, according to Nielsen/NetRatings.
This is burning up the “buzz” wires right now. More details later if and when the deal is done.
UPDATE: Press conference scheduled for 8AM PDT.
UPDATE: Here’s the press release – Microsoft and Yahoo! Announce Landmark Interoperability Agreement to Connect Consumer Instant Messaging Communities Globally:
Yahoo! Inc. and Microsoft Corp. today announced a landmark agreement to connect users of their consumer instant messaging (IM) services on a global basis. The industry’s first interoperability agreement between two distinct leading global consumer IM providers will give MSN® Messenger and Yahoo!® Messenger users the ability to interact with each other, forming what is expected to be the largest consumer IM community in the world, estimated to be more than 275 million strong.
Being able to instant message between IM communities is one of the features most requested by MSN Messenger and Yahoo! Messenger users, and Microsoft and Yahoo! share a commitment to provide IM interoperability while keeping consumer security and privacy first and foremost. In addition to exchanging instant messages, consumers from both communities will be able to see their friends’ online presence, share select emoticons, and easily add new contacts from either service to their friends’ list, all as part of their free IM service.* Yahoo! and Microsoft plan to introduce these interconnectivity capabilities between MSN Messenger and Yahoo! Messenger to customers around the world in the second quarter of 2006, and in doing so expect to help make IM an even more useful part of consumers’ online communications and communities.
Note that they are claiming that on a worldwide basis, the combination will be number 1 in terms of numbers of users.