Microsoft and Yahoo have added each other to their “buddy lists”, announcing a landmark agreement on Wednesday to link two of the world’s biggest instant-messaging (IM) services.

The deal marks a breakthrough in the biggest inter-operability problem facing consumers. on the computer desktop. Unlike the telephone system, where users can reach one another across any network, AOL, Microsoft, Yahoo, Google and Skype all operate networks whose members cannot talk to users of competing services.

Microsoft and Yahoo said they would enable inter-connectivity in the second quarter of 2006 so that users could see members of the other service in their desktop lists as well as message them, use “smiley” emoticons and make a PC-to-PC voice call.

This would create “the largest consumer IM community in the world, estimated to be more than 275m strong”, they said. in a joint statement.

“This is truly a turning point for the IM industry, and we believe our agreement with Microsoft will help usher in a new era of IP communications,” said Terry Semel, Yahoo CEO.

“IM inter-operability is the right thing for our customers, our businesses and the industry as a whole,” said Steve Ballmer, Microsoft chief executive.

Microsoft has made strides with inter-operability in enterprise IM but has been in fruitless discussions for years with AOL, the biggest IM service, on making their consumer services compatible. The new partners suggested yesterday they would not be able to link with other IM providers for at least the next six months as they worked out the complexities of the ir new relationship.

Smaller services such as Trillian, Jabber and Meebo have been able to provide unified buddy lists for the different messaging services, but Microsoft and Yahoo said secure inter-operability was a different matter.

“There’s a big difference in doing it in scale and in respecting users’ privacy. When you do this with a 250m people or more in multiple languages, you really want to make it secure,” Dan Rosensweig, Yahoo chief operating officer, said.told the FT.

The Radicati Group research firm has estimated the total IM market for consumer and business users to be 867m accounts in 2005, rising to 1.2bn by 2009. About 12.5bn IMs a day are sent on public messaging networks.

The Microsoft and Yahoo link-up will not include the web camera and photo-sharing capabilities of their Messenger programs, but such features were “on the list” for integration, they said.

No advertising co-operation was planned, with the main benefits of the deal appearing to be the increased appeal of the two services to users compared to other networks that will lack such inter-operability.

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