Microsoft acquires Hotmail

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Microsoft Corp.'s acquisition of free Web e-mail service Hotmail on Dec. 31 expands the software giant's portfolio of ad-supported Web products. Hotmail, which claims more than 9 million users, gives Microsoft a vehicle to offer a free e-mail account to anyone with Internet access. Microsoft is the latest Internet power to buy or partner with a free Web e-mail service. Yahoo! Corp. in October bought 411 Corp. for its free Rocket Mail service and popular white pages; America Online, CompuServe and other major search engines all offer free e-mail.

Steve Douty, VP-sales marketing at Hotmail, Sunnyvale, Calif., said the company started talking to Microsoft several months ago about a partnership that led to the acquisition. Financial terms were not disclosed.

Hotmail, which becomes part of the Microsoft Network family, will operate independently as a wholly owned subsidiary. Mr. Douty said Microsoft and Hotmail will pursue cross-promotions.

``This merger provides our members with better and more rapid enhancements to the service,'' said Mr. Douty. For Microsoft, ``I think it's adding to their portfolio of free services.''

Microsoft plans to let MSN online service subscribers access their e-mail through Hotmail, allowing MSN subscribers to check e-mail even when they are not accessing the Web through MSN. AOL offers its subscribers a similar feature.

Copyright December 1997, Crain Communications Inc.

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