Microsoft Unleashes $50 Million Ad Campaign

REDMOND, Wash. — Microsoft Corp. has launched a $50 million advertising campaign aimed at persuading customers of America Online Inc. to switch to MSN Internet Access.

The move comes a week after AOL, a unit of AOL Time Warner Inc. (AOL), announced it was raising its monthly fee on unlimited service to $23.90 from $21.95 beginning in the July billing cycle.

Microsoft (MSFT) said Tuesday its nationwide campaign will offer three months of free Internet access as well as a $21.95-per-month rate guarantee until Jan. 1, 2003, if users switch to MSN by June 30, 2001.

The software giant said inquiries at its call centers have risen 50% since AOL announced its rate increase, the first in three years. The last time AOL increased the price of unlimited service was April 1998.

However, AOL has previously shown that users will stick with the service even if the they have to pay more.

When the company last increased its rates — from the industry standard at the time of $19.95 — competitors were largely unsuccessful in stealing customers away. At the time, AOL had about 11 million members; it now boasts more than 29 million members world-wide.

AOL is the largest provider of Internet access. MSN ranks No. 2, claiming five million subscribers, while Earthlink Inc. (ELNK) is third with 4.8 million customers. Earthlink said last week it was evaluating its options with regard to price increases.

Separately, MSN has signed an agreement with the information services unit of Verizon Communications (VZ). Under the deal, Verizon’s yellow pages information, known was, will be made available to MSN users. Details of the agreement weren’t immediately available.

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