Control Video Corporation (1983–85) |
Quantum Computer Services (1985–91)
America Online (1991–2009)
Web search engine
1983 (as Control Video Corporation) |
2009 (as AOL Inc.)
770 Broadway |
New York, NY 10003
(Chairman and CEO)
Number of employees
AOL TIme Warner (2000–06)|
Verizon Communications (2015–present)
AOL Inc. (simply known as AOL, originally known as America Online) is an American multinational mass media corporation based in New York, a subsidiary of Verizon Communications. The company owns and operates websites such as The Huffington Post, TechCrunch and Engadget, and spans digital distribution of content, products, and services, which it offers to consumers, publishers, and advertisers.
AOL was one of the early pioneers of the Internet in the mid-1990s, and the most recognized brand on the web in the U.S. It originally provided a dial-up service to millions of Americans, as well as providing a web portal, e-mail, instant messaging and later a web browser following its purchase of Netscape. At the height of its popularity, it purchased the media conglomerate Time Warner in the largest merger in U.S. history. AOL rapidly declined thereafter, partly due to the decline of dial-up to broadband. AOL was eventually spun off from Time Warner in 2009, with Tim Armstrong appointed the new CEO. Under his leadership, the company invested in media brands and advertising technologies.
On June 23, 2015, AOL was acquired by Verizon Communications for $4.4 billion, which turned it into a subsidiary. In the following months, AOL also made a deal with Microsoft and acquired several tech properties, including Millennial Media and Kanvas to bolster their mobile ad-tech capabilities.
1983–91: Early years
AOL began in 1983, as a short-lived venture called Control Video Corporation (or CVC), founded by Bill von Meister. Its sole product was an online service called GameLine for the Atari 2600 video game console, after von Meister's idea of buying music on demand was rejected by Warner Bros. Subscribers bought a modem from the company for US$49.95 and paid a one-time US$15 setup fee. GameLine permitted subscribers to temporarily download games and keep track of high scores, at a cost of US$1 per game. The telephone disconnected and the downloaded game would remain in GameLine's Master Module and playable until the user turned off the console or downloaded another game.
In January 1983, Steve Case was hired as a marketing consultant for Control Video on the recommendation of his brother, investment banker Dan Case. In May 1983, Jim Kimsey became a manufacturing consultant for Control Video, which was near bankruptcy. Kimsey was brought in by his West Point friend Frank Caufield, an investor in the company. In early 1985, von Meister left the company.
On May 24, 1985, Quantum Computer Services, an online services company, was founded by Jim Kimsey from the remnants of Control Video, with Kimsey as Chief Executive Officer, and Marc Seriff as Chief Technology Officer. The technical team consisted of Marc Seriff, Tom Ralston, Ray Heinrich, Steve Trus, Ken Huntsman, Janet Hunter, Dave Brown, Craig Dykstra, Doug Coward, and Mike Ficco. In 1987, Case was promoted again to executive vice-president. Kimsey soon began to groom Case to take over the role of CEO, which he did when Kimsey retired in 1991.
Kimsey changed the company's strategy, and in 1985, launched a dedicated online service for Commodore 64 and 128 computers, originally called Quantum Link ("Q-Link" for short). The Quantum Link software was based on software licensed from PlayNet, Inc, (founded in 1983 by Howard Goldberg and Dave Panzl). The service was different from other online services as it used the computing power of the Commodore 64 and the Apple II rather than just a "dumb" terminal. It passed tokens back and forth and provided a fixed price service tailored for home users. In May 1988, Quantum and Apple launched AppleLink Personal Edition for Apple II and Macintosh computers. In August 1988, Quantum launched PC Link, a service for IBM-compatible PCs developed in a joint venture with the Tandy Corporation. After the company parted ways with Apple in October 1989, Quantum changed the service's name to America Online. Case was promoted to and sold AOL as the online service for people unfamiliar with computers, in contrast to CompuServe, which was well established in the technical community.
From the beginning, AOL included online games in its mix of products; many classic and casual games were included in the original PlayNet software system. In the early years of AOL the company introduced many innovative online interactive titles and games, including:
- Graphical chat environments Habitat (1986–1988) and Club Caribe (1988) from LucasArts.
- The first online interactive fiction series QuantumLink Serial by Tracy Reed (1988).
- Quantum Space, the first fully automated Play by email game (1989–1991).
1991–2006: Internet age, Time Warner merger
In February 1991, AOL for DOS was launched using a GeoWorks interface followed a year later by AOL for Windows. This coincided with growth in pay-based online services, like Prodigy, CompuServe, and GEnie. 1991 also saw the introduction of an original Dungeons & Dragons title called Neverwinter Nights from Stormfront Studios; which was one of the first Multiplayer Online Role Playing Games to depict the adventure with graphics instead of text.
During the early 1990s, the average subscription lasted for about 25 months and accounted for $350 in total revenue. AOL discontinued Q-Link and PC Link in late 1994. In September 1993, AOL added USENET access to its features. This is commonly referred to as the "Eternal September", as USENET's cycle of new users was previously dominated by smaller numbers of college and university freshmen gaining access in September and taking a few weeks to acclimate. AOL quickly surpassed GEnie, and by the mid-1990s, it passed Prodigy (which for several years allowed AOL advertising) and CompuServe. By 1993, AOL was able to provide public Internet access for its Windows client users.
Over the next several years, AOL launched services with the National Education Association, the American Federation of Teachers, National Geographic, the Smithsonian Institution, the Library of Congress, Pearson, Scholastic, ASCD, NSBA, NCTE, Discovery Networks, Turner Education Services (CNN Newsroom), NPR, The Princeton Review, Stanley Kaplan, Barron's, Highlights for Kids, the U.S. Department of Education, and many other education providers. AOL offered the first real-time homework help service (the Teacher Pager—1990; prior to this, AOL provided homework help bulletin boards), the first service by children, for children (Kids Only Online, 1991), the first online service for parents (the Parents Information Network, 1991), the first online courses (1988), the first omnibus service for teachers (the Teachers' Information Network, 1990), the first online exhibit (Library of Congress, 1991), the first parental controls, and many other online education firsts.
AOL charged its users an hourly fee until December 1996, when the company changed to a flat monthly rate of $19.95. During this time, AOL connections would be flooded with users trying to get on, and many canceled their accounts due to constant busy signals. A commercial featuring Steve Case telling people AOL was working day and night to fix the problem was made. Within three years, AOL's user base grew to 10 million people. In 1995 AOL was headquartered at 8619 Westwood Center Drive in the Tysons Corner CDP in unincorporated Fairfax County, Virginia, near the Town of Vienna.
AOL was quickly running out of room in October 1996 for its network at the Fairfax County campus. In 1996, AOL moved to 22000 AOL Way in Dulles, unincorporated Loudoun County, Virginia. The move to Dulles took place in mid-1996 and provided room for future growth. In a five-year landmark agreement with the most popular operating system, AOL was bundled with Windows software.
On March 31, 1997, the short-lived eWorld was purchased by AOL. In 1997, about half of all U.S. homes with internet access had it through AOL. During this time, AOL's content channels, under Jason Seiken, including News, Sports, and Entertainment, experienced their greatest growth as AOL become the dominant online service internationally with more than 34 million subscribers. In November 1998, AOL announced it would acquire Netscape. The deal closed on March 17, 1999.
In January 2000, AOL and Time Warner announced plans to merge, forming AOL Time Warner, Inc. The terms of the deal called for AOL shareholders to own 55% of the new, combined company. The deal closed on January 11, 2001. The new company was led by executives from AOL, SBI, and Time Warner. Gerald Levin, who had served as CEO of Time Warner, was CEO of the new company. Steve Case served as Chairman, J. Michael Kelly (from AOL) was the Chief Financial Officer, Robert W. Pittman (from AOL) and Dick Parsons (from Time Warner) served as Co-Chief Operating Officers. In 2002, Jonathan Miller became CEO of AOL. The following year, AOL Time Warner dropped the "AOL" from its name.
In 2004, along with the launch of AOL 9.0 Optimized, AOL also made available the option of personalized greetings which would enable the user to hear his or her name while accessing basic functions and mail alerts, or while logging in or out. In 2005, AOL broadcast the Live 8 concert live over the Internet, and thousands of users downloaded clips of the concert over the following months. In late 2005, AOL released AOL Safety & Security Center, a bundle of McAfee Antivirus, CA anti-spyware, and proprietary firewall and phishing protection software. News reports in late 2005 identified companies such as Yahoo!, Microsoft, and Google as candidates for turning AOL into a joint venture. Those plans were abandoned when it was revealed on December 20, 2005 that Google would purchase a 5% share of AOL for $1 billion.
2006–09: Rebranding and decline
On April 3, 2006, AOL announced it was retiring the full name America Online; the official name of the service became AOL, and the full name of the Time Warner subdivision became AOL LLC. On June 8, 2006, AOL offered a new program called AOL Active Security Monitor, a diagnostic tool which checked the local PC's security status, and recommended additional security software from AOL or Download.com. The program rated the computer on a variety of different areas of security and general computer health. Two months later, AOL released AOL Active Virus Shield. This software was developed by Kaspersky Lab. Active Virus Shield software was free and did not require an AOL account, only an internet email address. The ISP side of AOL UK was bought by The Carphone Warehouse in October 2006 to take advantage of their 100,000 LLU customers, making The Carphone Warehouse the biggest LLU provider in the UK.
On August 2006, AOL announced they would give away email accounts and software previously available only to its paying customers provided the customer accessed AOL or AOL.com through a non-AOL-owned access method (otherwise known as "third party transit", "bring your own access", or "BYOA"). The move was designed to reduce costs associated with the "Walled Garden" business model by reducing usage of AOL-owned access points and shifting members with high-speed internet access from client-based usage to the more lucrative advertising provider, AOL.com. The change from paid to free was also designed to slow the rate of members canceling their accounts and defecting to Microsoft Hotmail, Yahoo!, or other free email providers. The other free services included:
- AIM (AOL Instant Messenger)
- AOL Video featured professional content and allowed users to upload videos as well.
- AOL Local, comprising its CityGuide, Yellow Pages and Local Search services to help users find local information like restaurants, local events, and directory listings.
- AOL News
- AOL My eAddress, a custom domain name for email addresses. These email accounts could be accessed in a manner similar to other AOL and AIM email accounts.
- Xdrive, which was a service offered by AOL, allowed users to back up their files over the Internet. It was acquired by AOL on August 3, 2005 and closed on January 12, 2009. It offered a free 5 GB account (free online file storage) to anyone with an AOL screenname. Xdrive also provided remote backup services and 50 GB of storage for a $9.95 per month fee.
Also that month, AOL informed its American customers it would be increasing the price of its dial-up access to US$25.90. The increase was part of an effort to migrate the service's remaining dial-up users to broadband, as the increased price was the same price they had been charging for monthly DSL access. However, AOL has since started offering their services for $9.95 a month for unlimited dial-up access.
On November 16, 2006, Randy Falco succeeded Jonathan Miller as CEO. In December 2006, AOL closed their last remaining call center in the United States, "taking the America out of America Online" according to industry pundits. Service centers based in India and the Philippines continue to this day to provide customer support and technical assistance to subscribers.
On September 17, 2007, AOL announced it was moving one of its corporate headquarters from Dulles, Virginia, to New York City and combining its various advertising units into a new subsidiary called Platform A. This action followed several advertising acquisitions, most notably Advertising.com, and highlighted the company's new focus on advertising-driven business models. AOL management stressed "significant operations" will remain in Dulles, which included the company's access services and modem banks.
In October 2007, AOL announced it would move one of its other headquarters from Loudoun County, Virginia, to New York City; it would continue to operate its Virginia offices. As part of the impending move to New York and the restructuring of responsibilities at the Dulles headquarters complex after the Reston move, AOL CEO Randy Falco announced on October 15, 2007 plans to lay off 2,000 employees worldwide by the end of 2007, beginning "immediately". The end result was a near 40% layoff across the board at AOL. Most compensation packages associated with the October 2007 layoffs included a minimum of 120 days of severance pay, 60 of which were given in lieu of the 60-day advance notice requirement by provisions of the 1988 Federal WARN Act.
By November 2007, AOL's customer base had been reduced to 10.1 million subscribers, just narrowly ahead of Comcast and AT&T Yahoo!. According to Falco, as of December 2007, the conversion rate of accounts from paid access to free access was over 80%.
On January 3, 2008, AOL announced the closing of one of its three Northern Virginia data centers, Reston Technology Center, and sold it to CRG West. On February 6, Time Warner CEO Jeff Bewkes announced Time Warner would split AOL's internet access and advertising businesses in two, with the possibility of later selling the internet access division.
On March 13, 2008, AOL purchased the social networking site Bebo for $850m (£417m). On July 25, AOL announced it was shedding Xdrive, AOL Pictures, and BlueString to save on costs and focus on its core advertising business. AOL Pictures was terminated on December 31. On October 31, AOL Hometown (a web hosting service for the websites of AOL customers) and the AOL Journal blog hosting service were eliminated.
2009–15: As a digital media company
On March 12, 2009, Tim Armstrong, formerly with Google, was named Chairman and CEO of AOL. Shortly thereafter, on May 28, Time Warner announced it would spin off AOL as an independent company once Google's shares ceased at the end of the fiscal year. On November 23, AOL unveiled a sneak preview of a new brand identity which has the wordmark "Aol." superimposed onto canvases created by commissioned artists. The new identity, designed by Wolff Olins, was enacted onto all of AOL's services on December 10, the date AOL traded independently for the first time since the Time Warner merger on the New York Stock Exchange under the symbol AOL.
On April 6, 2010, AOL announced plans to shut down or sell Bebo; on June 16, the property was sold to Criterion Capital Partners for an undisclosed amount, believed to be around $10 million. In December, AIM eliminated access to AOL chat rooms noting a marked decline of patronage in recent months.
Under Armstrong's leadership, AOL began taking steps in a new business direction, marked by a series of acquisitions. On June 11, 2009, AOL had already announced the acquisition of Patch Media, a network of community-specific news and information sites which focuses on individual towns and communities. On September 28, 2010, at the San Francisco TechCrunch Disrupt Conference, AOL signed an agreement to acquire TechCrunch to further its overall strategy of providing premier online content. On December 12, 2010, AOL acquired about.me, a personal profile and identity platform, four days after that latter's public launch.
On January 31, 2011, AOL announced the acquisition of European video distribution network, goviral. On February 7, AOL bought The Huffington Post for $315 million. Shortly after the acquisition was announced, Huffington Post co-founder Arianna Huffington replaced AOL Content Chief David Eun, assuming the role of President and Editor-in-Chief of the AOL Huffington Post Media Group. On March 10, AOL announced it would cut around 900 workers in the wake of the Huffington Post deal.
On September 14, 2011, AOL formed a strategic ad selling partnership with two of its largest competitors, Yahoo and Microsoft. According to the new partnership, the three companies would begin selling inventory on each other's sites. The strategy was designed to help them compete with Google and ad networks.
On February 28, 2012, AOL partnered with PBS to launch MAKERS, a digital documentary series focusing on high-achieving women in male-dominated industries such as war, comedy, space, business, Hollywood and politics. Subjects for MAKERS episodes have included Oprah Winfrey, Hillary Clinton, Sheryl Sandberg, Martha Stewart, Indra Nooyi, Lena Dunham, and Ellen DeGeneres.
On March 15, 2012, AOL announced the acquisition of Hipster, a mobile photo sharing app for an undisclosed amount. On April 9, 2012, AOL announced a deal to sell 800 patents to Microsoft for $1.056 billion. The deal includes a "perpetual" license for AOL to use these patents.
In April, AOL took several steps to expand its ability to generate revenue through online video advertising. The company announced it would offer gross rating point (GRP) guarantee for online video, mirroring the TV ratings system and guaranteeing audience delivery for online video advertising campaigns bought across its properties. This announcement came just days before the Digital Content NewFront (DCNF) a two-week event held by AOL, Google, Hulu, Microsoft, Vevo and Yahoo to showcase the participating sites' digital video offerings. The Digital Content NewFront were conducted in advance of the traditional television upfronts in hopes of diverting more advertising money into the digital space. On April 24, the company launched the AOL On network, a single website for its video output.
In August 2013, Armstrong announced Patch Media would scale back or sell hundreds of its local news sites. Not long afterwards, layoffs began, with up to 500 out of 1,100 positions initially impacted. On January 15, 2014, Patch Media was spun off, with majority ownership being held by Hale Global. By the end of 2014, AOL controlled 0.74% of the global advertising market, well behind industry leader Google's 31.4%.
On January 23, 2014, AOL acquired Gravity, a software startup that tracked users’ online behavior and tailored ads and content based on their interests, for $83 million. The deal, which included roughly 40 Gravity employees and their personalization technology, was CEO Tim Armstrong’s fourth largest deal since taking over the company in 2009. Later that year, AOL also acquired Vidible, which developed technology to help websites run video content from other publishers, and help video publishers sell their content to these websites. The deal, which was announced December 1, 2014, was reportedly worth roughly $50 million.
On July 16, 2014, AOL earned an Emmy nomination for the AOL original series, The Future Starts Here, in the News and Documentary category; this came days after AOL earned its first Emmy nomination for Park Bench with Steve Buscemi in the Outstanding Short-Format Nonfiction Program category. Created and hosted by Tiffany Shlain, the series focused on human's relationship with technology and featured episodes such as The Future of Our Species, Why We Love Robots, and A Case for Optimism.
2015–present: subsidiary of Verizon
On May 12, 2015, Verizon announced plans to buy AOL for $50 per share in a deal valued at $4.4 billion. The transaction was completed on June 23. Armstrong, who continued to lead the firm following regulatory approval, called the deal the logical next step for AOL. "If you look forward five years, you're going to be in a space where there are going to be massive, global-scale networks, and there's no better partner for us to go forward with than Verizon." he said. "It's really not about selling the company today. It's about setting up for the next five to 10 years."
Analyst David Bank said he thought the deal made sense for Verizon. The deal will broaden Verizon's advertising sales platforms and increase its video production ability through websites such as The Huffington Post, TechCrunch, and Engadget. However, Craig Moffett said it was unlikely the deal would make a big difference to Verizon's bottom line. AOL had about two million dial-up subscribers at the time of the buyout. The announcement caused AOL's stock price to rise 17%, while Verizon's stock price dropped slightly.
Shortly before the Verizon purchase, on April 14, 2015, AOL launched ONE by AOL, a digital marketing programmatic platform that unifies buying channels and audience management platforms to track and optimize campaigns over multiple screens. Later that year, on September 15, AOL expanded the product with ONE by AOL: Creative, which is geared towards creative and media agencies to similarly connect marketing and ad distribution efforts.
On May 8, 2015, AOL reported its first quarter revenue of $625.1 million, $483.5 million of which came from advertising and related operations, marking a 7% increase from Q1 2014. Over that year, the AOL Platforms division saw a 21% increase in revenue, but a drop in adjusted OIBDA due to increased investments in the company’s video and programmatic platforms.
On June 29, 2015, AOL announced a deal with Microsoft to take over the majority of its digital advertising business. Under the pact, as many as 1,200 Microsoft employees involved with the business will be transferred to AOL, and the company will take over the sale of display, video, and mobile ads on various Microsoft platforms in nine countries, including Brazil, Canada, the United States, and the United Kingdom. Additionally, Google Search will be replaced on AOL properties with Bing—which will display advertising sold by Microsoft. Both advertising deals are subject to affiliate marketing revenue sharing.
On July 22, 2015, AOL received two News and Documentary Emmy nominations, one for MAKERS in the Outstanding Historical Programming category, and the other for True Trans With Laura Jane Grace, which documented the story of Laura Jane Grace, a transgender musician best known as the founder, lead singer, songwriter and guitarist of the punk rock band Against Me!, and her decision to come out publicly and overall transition experience.
On September 3, 2015, AOL agreed to buy Millennial Media for US $238 million . On October 23, 2015, AOL completed the acquisition.
On October 1, 2015, Go90, a free ad-supported mobile video service aimed at young adult and teen viewers that Verizon owns and AOL oversees and operates launched its content publicly after months of beta testing. The initial launch line-up included content from Comedy Central, Huffington Post, Nerdist News, Univision News, Vice, ESPN and MTV.
On January 25, 2016, AOL expanded its ONE platform by introducing ONE by AOL: Publishers, which combines six previously separate technologies to offer various publisher capabilities such as customizing video players, offering premium ad experience to boost visibility, and generating large video libraries. The announcement was made in tandem with AOL’s acquisition of AlephD, a Paris-based startup focused on publisher analytics of ad price tracking based on historical data. AOL announced AlephD would be a part of the ONE by AOL: Publishers platform.
On April 20, 2016, AOL acquired virtual reality studio RYOT to bring immersive 360 degree video and VR content to The Huffington Post’s global audience across desktop, mobile, and apps.
In July 2016, Verizon Communications announced its intent to purchase the core internet business of Yahoo!, another fallen giant in the industry. Verizon's goal is to merge AOL and Yahoo!.
Products and services
AOL's products and services are in the following areas: Content, Advertising and Membership.
AOL’s family of brands include The Huffington Post, and AOL’s independent brands (iBrands), and AOL.com. Other AOL media brands include:
- The Huffington Post
- Style Me Pretty
- AOL BUILD
- Live chat rooms. Some were custom created by members and some were permanent and made by AOL and they all covered a wide variety of topics
AOL's content contributors consists of over 20,000 bloggers, including politicians, celebrities, academics and policy experts, who contribute on a wide range of topics making news. The group's video is collected on its AOL On site, which offers channels in news, entertainment, style, tech, business, food, home, travel, health, autos, parenting, relationships, video games and pets.
AOL produces the MAKERS video series, focused on high-achieving women. AOL also hosts and livestreams their BUILD interview series featuring guests from the worlds of entertainment, tech, fashion, and business.
In addition to mobile-optimized web experiences, AOL produces mobile applications for existing AOL properties like AOL On, Autoblog, Engadget, The Huffington Post, AOL MAKERS, Moviefone, TechCrunch, AIM, MapQuest, and products such as AIM, Alto, Pip, and Vivv.
AOL has a global portfolio of media brands and advertising solutions across mobile, desktop, and TV. Solutions include brand integration and sponsorships through its in-house branded content arm, Partner Studio by AOL, as well as data and programmatic offerings through ad technology stack, ONE by AOL.
AOL acquired a number of businesses and technologies help to form ONE by AOL. These acquisitions included AdapTV in 2013 and Convertro, Precision Demand, and Vidible in 2014. ONE by AOL is further broken down into ONE by AOL for Publishers (formerly Vidible, AOL On Network and Be On for Publishers) and ONE by AOL for Advertisers, each of which have several sub-platforms.
ONE by AOL for Publishers consists of:
- ONE by AOL: Ad Server
- ONE by AOL: Audience
- ONE by AOL: Creative
- ONE by AOL: Display MP
- ONE by AOL: Mobile
- ONE by AOL: Video
- ONE by AOL: Video Marketplace
ONE by AOL for Advertisers consists of:
- ONE by AOL: Attribution
- ONE by AOL: Audience
- ONE by AOL: Creative
- ONE by AOL: Display
- ONE by AOL: TV
- ONE by AOL: Video
- ONE by AOL: Video Marketplace
AOL offers a range of integrated products and properties including communication tools, mobile apps and services and subscription packages.
- Dial-up Internet access – According to AOL quarterly earnings report May 8, 2015, 2.1 million people still use AOL's dial-up service.
- AOL Mail – AOL Mail is AOL's proprietary email client. It is fully integrated with AIM and links to news headlines on AOL content sites.
- AOL Instant Messenger (AIM) – is AOL's proprietary instant-messaging tool. It also comprises a video-chat service, AV by AIM.
- AOL Plans — AOL Plans offers three online safety and assistance tools: ID protection, data security and a general online technical assistance service.
|Operating system||Microsoft Windows XP or later, Mac OS X 10.4.8 or later|
AOL Desktop is an internet suite produced by AOL that integrates a web browser, a media player and an instant messenger client. Version 10.X was based on AOL OpenRide, it is an upgrade from such. The Mac OS X version is based on WebKit.
AOL Desktop version 10.X was different from previous AOL browsers and AOL Desktop versions. Its features are focused on web browsing as well as email. For instance, one does not have to sign into AOL in order to use it as a regular browser. In addition, non-AOL email accounts can be accessed through it. There are several predominate buttons: "MAIL", "IM", and several shortcuts to various Web Pages. The first two require users to sign in but the shortcuts to web pages can be used without authentication. AOL Desktop version 10.X was late marked as unsupported in favor of supporting the AOL Desktop 9.X versions.
Version 9.8 was released, replacing the Internet Explorer components of the internet browser with CEF (Chromium Embedded Framework) to give users an improved web browsing experience closer to that of Chrome
Corporate social responsibility
Since spinning off from Time Warner in 2010, AOL has made corporate social responsibility an important part of its mission. In its company values, AOL states, "We are in the business of helping people, period." For the company's corporate social responsibility efforts, AOL's CEO Tim Armstrong was included in a July 9, 2012 Adweek article, "The Givers," highlighting individuals who have committed their and their companies' time, money and resources to a diverse range of causes.
Each year on the company's birthday, AOL employees around the world are invited to participate in Monster Help Day, a global community service day dedicated to strengthening the communities in which AOL employees live and work. Other corporate social responsibility initiatives include producing cause-related content for AOL properties; donating PSA campaigns throughout the AOL network; empowering consumers through cause-related contests and initiatives; implementing a permanent cause module on AOL's homepage, dedicated to promoting nonprofit organizations.
In its earlier incarnation as a "walled garden" community and service provider, AOL received criticism for its community policies, terms of service, and customer service. Prior to 2006, AOL was known for its direct mailing of CD-ROMs and 3½" floppy disks containing its software. The disks were distributed in large numbers; at one point, half of the CDs manufactured worldwide had AOL logos on them. The marketing tactic was criticized for its environmental cost, and AOL CDs were recognized as PCWorld's most annoying tech product.
Prior to mid-2005, AOL used online volunteers called Community Leaders, or CLs, to monitor chatrooms, message boards, and libraries. AOL's use of remote volunteers dated back to the establishment of its Quantum Link service in 1985. Most content maintenance was performed by partner and internal employees. Community leaders were recruited for some content design and maintenance, for which they used a proprietary language and interface called RAINMAN. Other community leaders hosted chat rooms and provided online help. During the time that AOL customers paid by the hour, chat room hosts were compensated in free online time for each hour they worked, though of course any banked hours became worthless once fixed-rate payment was introduced.
Two former community leaders, Brian Williams of Dallas and Kelly Hallissey of New York filed a class action lawsuit against AOL, citing violations of U.S. labor laws in its use of community leaders. The lawsuit was filed in the United States Federal Courthouse, New York City on May 25, 1999, and was followed shortly by the dismissal of all community leaders under the age of 18 years, as well as a reorganization of the community leader program as a whole. The Department of Labor was also investigating AOL's alleged labor law violations, but came to no conclusion, closing their investigation in 2001. AOL began drastically reducing the responsibilities and privileges of its volunteers in 2000. The program was eventually ended on June 8, 2005. Current Community Leaders at the time were offered 12 months of credit on their accounts in thanks for their service.
Within one decade of the class action lawsuit being filed, the class had grown to over 6,000 members, comprisinging the largest class action lawsuit ever filed against an internet based company. Currently it is the third largest class ever involved in any lawsuit on a federal level in the United States, affecting ultimately the employment eligibility of individuals in an online environment.
In February 2010, a settlement was approved by the Courts in the class action suit. The settlement included a $15 million USD payment. This payment was then divided into thirds, the first of which was attorney and legal fees. Five Million was then divided among the included members of the class which consisted of more than 7,000 individual former Community Leaders. The final five million dollars was donated to charities hand picked by Hallissey and Williams, and then approved by the Courts for distribution. One such charity, the Remote Area Medical Foundation (www.ramusa.org), received payments in excess of $1.2 million USD for the provision of medical services, supplies and medication for those in need within the more rural areas of the United States and beyond.
Prior to the 1999 class action lawsuit, the community leaders were informed of a change in compensation for duties performed by AOL. Community leaders would be charged a reduced rate per month for their accounts, and would no longer be given unlimited access without invoice. During this live announcement via an online meeting of all community leaders in a virtual arena, Brian Williams of Dallas led many community leaders in a virtual "strike" or "sit-in" to protest the new charges the community leaders were now being asked to pay. This protest or strike is noted as the first of its kind for an online environment and was nicknamed for the row of the arena it was held in: Row 800. Following the protest, AOL terminated the online working relationship between itself and several of the Community Leaders involved. Quickly following the release of these community leaders, each was reinstated, with the exception of Williams, due to his role in the protest. During this time, Williams' role on AOL was that of Guide XNT (Guide Program), CB Naked (Crystal Ball forum), VnV Naked (iVillage's Vices and Virtues Forum) and JCommBrian (Jewish Community Online Forum).
AOL has faced a number of lawsuits over claims that it has been slow to stop billing customers after their accounts have been canceled, either by the company or the user. In addition, AOL changed its method of calculating used minutes in response to a class action lawsuit. Previously, AOL would add 15 seconds to the time a user was connected to the service and round up to the next whole minute (thus, a person who used the service for 12 minutes and 46 seconds would be charged for 14 minutes). AOL claimed this was to account for sign on/sign off time, but because this practice was not made known to its customers, the plaintiffs won (some also pointed out that signing on and off did not always take 15 seconds, especially when connecting via another ISP). AOL disclosed its connection-time calculation methods to all of its customers and credited them with extra free hours. In addition, the AOL software would notify the user of exactly how long they were connected and how many minutes they were being charged.
AOL was sued by the Ohio Attorney General in October 2003 for improper billing practices. The case was settled on June 8, 2005. AOL agreed to resolve any consumer complaints filed with the Ohio AG's office. In December 2006, AOL agreed to provide restitution to Florida consumers to settle the case filed against them by the Florida Attorney General.
Many customers complained that AOL personnel ignored their demands to cancel service and stop billing. In response to approximately 300 consumer complaints, the New York Attorney General's office began an inquiry of AOL's customer service policies. The investigation revealed that the company had an elaborate scheme for rewarding employees who purported to retain or "save" subscribers who had called to cancel their Internet service. In many instances, such retention was done against subscribers' wishes, or without their consent. Under the scheme, customer service personnel received bonuses worth tens of thousands of dollars if they could successfully dissuade or "save" half of the people who called to cancel service. For several years, AOL had instituted minimum retention or "save" percentages, which consumer representatives were expected to meet. These bonuses, and the minimum "save" rates accompanying them, had the effect of employees not honoring cancellations, or otherwise making cancellation unduly difficult for consumers.
On August 24, 2005, America Online agreed to pay $1.25 million to the state of New York and reformed its customer service procedures. Under the agreement, AOL would no longer require its customer service representatives to meet a minimum quota for customer retention in order to receive a bonus. However the agreement only covered people in the state of New York.
On June 13, 2006, Vincent Ferrari documented his account cancellation phone call in a blog post, stating he had switched to broadband years earlier. In the recorded phone call, the AOL representative refused to cancel the account unless the 30-year-old Ferrari explained why AOL hours were still being recorded on it. Ferrari insisted that AOL software was not even installed on the computer. When Ferrari demanded that the account be canceled regardless, the AOL representative asked to speak with Ferrari's father, for whom the account had been set up. The conversation was aired on CNBC. When CNBC reporters tried to have an account on AOL cancelled, they were hung up on immediately and it ultimately took more than 45 minutes to cancel the account.
On July 19, 2006, AOL's entire retention manual was released on the Internet. On August 3, 2006, Time Warner announced that the company would be dissolving AOL's retention centers due to its profits hinging on $1 billion in cost cuts. The company estimated that it would lose more than six million subscribers over the following year.
Direct marketing of disks
Prior to 2006, AOL was infamous for the unsolicited mass direct mail of 3½" floppy disks and CD-ROMs containing their software. They were the most frequent user of this marketing tactic, and received criticism for the environmental cost of the campaign. According to PC World, in the 1990s "you couldn't open a magazine (PC World included) or your mailbox without an AOL disk falling out of it".
The mass distribution of these disks was seen as wasteful by the public and led to protest groups. One such was No More AOL CDs, a web-based effort by two IT workers to collect one million disks with the intent to return the disks to AOL. The website was started in August 2001, and an estimated 410,176 CDs were collected by August 2007 when the project was shut down. AOL CDs were recognized as No.1 on PCWorld's top ten list of most annoying tech products.
- In 2000, AOL was served with an $8 billion lawsuit alleging that its AOL 5.0 software caused significant difficulties for users attempting to use third-party Internet service providers. The lawsuit sought damages of up to $1000 for each user that had downloaded the software cited at the time of the lawsuit. AOL later agreed to a settlement of $15 million, without admission of wrongdoing. The AOL software then was given a feature called AOL Dialer, or AOL Connect on Mac OS X. This feature allowed users to connect to the ISP without running the full interface. This allowed users to use only the applications they wish to use, especially if they do not favor the AOL Browser.
- AOL 9.0 was once identified by Stopbadware as being under investigation for installing additional software without disclosure, and modifying browser preferences, toolbars, and icons. However, as of the release of AOL 9.0 VR (Vista Ready) on January 26, 2007, it was no longer considered badware due to changes AOL made in the software.
When AOL gave clients access to Usenet in 1993, they hid at least one newsgroup in standard list view: alt.aol-sucks. AOL did list the newsgroup in the alternative description view, but changed the description to "Flames and complaints about America Online". With AOL clients swarming Usenet newsgroups, the old, existing user base started to develop a strong distaste for both AOL and its clients, referring to the new state of affairs as Eternal September.
AOL discontinued access to Usenet on June 25, 2005. No official details were provided as to the cause of decommissioning Usenet access, except providing users the suggestion to access Usenet services from a third-party, Google Groups. AOL then provided community-based message boards in lieu of Usenet.
Terms of Service (TOS)
There have been many complaints over rules that govern an AOL user's conduct. Some users disagree with the TOS, citing the guidelines are too strict to follow coupled with the fact the TOS may change without users being made aware. A considerable cause for this was likely due to alleged censorship of user-generated content during the earlier years of growth for AOL.
In early 2005, AOL stated its intention to implement a certified email system called Goodmail, which will allow companies to send email to users with whom they have pre-existing business relationships, with a visual indication that the email is from a trusted source and without the risk that the email messages might be blocked or stripped by spam filters.
This decision drew fire from MoveOn, which characterized the program as an "email tax", and the EFF, which characterized it as a shakedown of non-profits. A website called Dearaol.com was launched, with an online petition and a blog that garnered hundreds of signatures from people and organizations expressing their opposition to AOL's use of Goodmail.
Esther Dyson defended the move in a New York Times editorial saying "I hope Goodmail succeeds, and that it has lots of competition. I also think it and its competitors will eventually transform into services that more directly serve the interests of mail recipients. Instead of the fees going to Goodmail and EON, they will also be shared with the individual recipients."
Other members of the antispam and blogging community were broadly critical of MoveOn.org and the EFF's attempts to characterize this as a "shakedown".
Tim Lee of the Technology Liberation Front posted an article that questioned the EFF's adopting a confrontational posture when dealing with private companies. Lee's article cited a series of discussions on Declan McCullagh's Politechbot mailing list on this subject between the EFF's Danny O'Brien and antispammer Suresh Ramasubramanian, who has also compared the EFF's tactics in opposing Goodmail to tactics used by Republican political strategist Karl Rove. Spamassassin developer Justin Mason posted some criticism of the EFF's and Moveon's "going overboard" in their opposition to the scheme.
The dearaol.com campaign lost momentum and disappeared, with the last post to the now defunct dearaol.com blog—"AOL starts the shakedown" being made on May 9, 2006.
Comcast, who also used the service, announced on its website that Goodmail had ceased operations and as of February 4, 2011 they no longer used the service.
On August 4, 2006, AOL released a compressed text file on one of its websites containing 20 million search keywords for over 650,000 users over a 3-month period between March 1, 2006 and May 31, intended for research purposes. AOL pulled the file from public access by August 7, but not before its wide distribution on the Internet by others. Derivative research, titled A Picture of Search was published by authors Pass, Chowdhury and Torgeson for The First International Conference on Scalable Information Systems.
The data were used by websites such as AOLstalker for entertainment purposes, where users of AOLstalker are encouraged to judge AOL clients based on the humorousness of personal details revealed by search behavior.
User list exposure
In 2003, Jason Smathers, an AOL employee, was convicted of stealing America Online's 92 million screen names and selling them to a known spammer. Smathers pled guilty to conspiracy charges in 2005. Smathers pled guilty to violations of the US CAN-SPAM Act of 2003. He was sentenced in August 2005 to 15 months in prison; the sentencing judge also recommended Smathers be forced to pay $84,000 in restitution, triple the $28,000 that he sold the addresses for.
AOL's Computer Checkup "scareware"
On February 27, 2012 a class action lawsuit was filed against Support.com, Inc. and partner AOL, Inc. The lawsuit alleged Support.com and AOL's Computer Checkup "scareware" (which uses software developed by Support.com) misrepresented that their software programs would identify and resolve a host of technical problems with computers, offered to perform a free “scan,” which often found problems with users' computers. The companies then offered to sell software—for which AOL allegedly charged $4.99 a month and Support.com $29—to remedy those problems. Both AOL, Inc. and Support.com, Inc. settled on May 30, 2013 for $8.5 million. This included $25.00 to each valid class member and $100,000 each to Consumer Watchdog and the Electronic Frontier Foundation. Judge Corley wrote: “Distributing a portion of the [funds] to Consumer Watchdog will meet the interests of the silent class members because the organization will use the funds to help protect consumers across the nation from being subject to the types of fraudulent and misleading conduct that is alleged here,” and “EFF’s mission includes a strong consumer protection component, especially in regards to online protection.”
AOL continues to market Computer Checkup. It is not clear if this latest Computer Checkup continues to use scareware techniques.
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