Controversial new media conditions hit Time Warner and America Online as the price for the last piece of regulatory approval for the two company's proposed merger.
The US's Federal Communications Commission (FCC) gave its approval for the takeover - the last clearance necessary for the $105bn deal to go ahead - but also imposed conditions on the development of instant messaging and providing competing high-speed Internet services with access to the new AOL-TW's cable systems.
The FCC judged instant messaging to be a key entertainment medium of the future. AOL-TW will have to open up the service to competitors as it turns instant messaging from a real time text exchange mechanism into a means for video streaming. The FCC required the company to adopt an industry standard on messaging within six months or to enter into at least two contracts with competitors such as Yahoo and Microsoft to ensure interoperability with different messaging services.
The whole area of developing technology and future regulation split the commission. While the five members voted unanimously in favour of approving the deal, they split three and two in favour of the new conditions.
Dissenting commissioner Michael Powell, who is expected to head the FCC under incoming President George W Bush, described the majority view that instant messaging is an "essential facility" for nearly all future real time internet communications as a "breathtaking prediction and conclusion by a regulatory authority".
The commission decided against imposing conditions on AOL's new interactive TV services, which had seemed more likely at one stage. Instead it has launched an inquiry into whether Federal rules on competition in this sector need to be drawn up.
The FCC also ruled that the new giant is not permitted to restrict the ability of customers to choose a rival Internet service provider (ISP) available over AOL Time Warner's cable service. "At a minimum, AOL Time Warner must allow customers to obtain a list of participating ISPs by calling their local AOL Time Warner cable system," the FCC said.
Additionally, AOL-TW cannot dictate the content of the first Internet screen that a customer of a rival ISP sees. Unaffiliated ISPs must be able to directly bill customers.
The FCC added that it would hold US cable operation AT&T to its commitment to divest its interest in Time Warner Entertainment. Additional restrictions mean AOL Time Warner cannot get exclusive access to AT&T's cable systems to offer high-speed Internet access.
With the European Commission having approved the deal back in September, the takeover can now go ahead. AOL-TW will be comfortably the world's largest media company and by far the largest broadband player in the US. AOL has 26 million subscribers, while Time Warner has 20 million cable subscribers, two film studios, seven record labels and a host of TV channels and magazines.