RealNames calls it quits, blames Microsoft
Date: MAY 13, 2002
Author: Joris Evers, IDG News Service

RealNames Corp. is shutting down and will end its Internet keyword
navigation service June 28. The Redwood City, Calif.-based company blamed
Microsoft Corp. for its failure. Microsoft won't renew RealNames' 2-year-old
contract to resolve keywords in Internet Explorer, the Web browser used by
most Internet users, said Keith Teare, RealNames' founder and CEO, in a
statement on his personal Web site.

RealNames, founded in 1996, set out to simplify navigating the Web by
replacing Web addresses with keywords. Rights to keywords were sold by
RealNames and partners around the globe. Keywords were used about 500
million times in the first quarter of this year, Teare wrote. Without
support in Internet Explorer, the keywords won't work. Eighty-three
employees were laid off Friday after Microsoft told the company earlier in
the week that it wouldn't renew its contract, which expires June 30, Teare
wrote. In a statement, Microsoft said "this was a very difficult decision
for the team that managed the relationship with RealNames."

"We are working to make MSN more useful everyday for our customers," said
spokesman Matt Pilla. "It was becoming difficult from the standpoint of the
business model and the user experience provided by the RealName services." A
Microsoft source also said there were problems with the search results that
some generic words returned. The results were often "counter-intuitive,"
this source said, and Microsoft had a difficult time monitoring the service
and ensuring a "positive user experience."

Webeffekt AG in Dinslaken, Germany, a European RealNames partner, confirmed
the end of RealNames. The company was informed via e-mail this morning. "The
information we got is that the cooperation between RealNames and Microsoft
will end," said Robert Biermann, general manager of Webeffekt. "I am not
sure what the effect on our business will be. We expect some angry
customers. Also, we invested in a platform to register keywords. It was all
a waste of time."

Under the March 2000 contract, Microsoft was given 20% of RealNames stock
and $15 million in cash. An additional $25 million was due this month.
RealNames couldn't afford the payment and proposed a new agreement. However,
control, not money, was the issue, Teare wrote in his statement. "Microsoft
dislike[s] the product because they cannot control it," he wrote. " A small
private company is being denied an audience -- not because of money -- but
because of fear of losing control." Teare said Microsoft is now working on
its own keyword navigation system.

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