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Game Theory and the Shutting Down of AOL Instant Messenger

AOL Instant Messenger is shutting down after 20 years

AOL Instant Messenger, AIM, is shutting down after 20 years on December 15th this year. There was a big reaction to this news, and AIM became a trending topic, users expressing an outpour of nostalgia. Although there was a substantial reaction, most people may have saw it coming eventually. Although AIM was extremely popular at some point, it could not compete with other social media platforms such as Facebook Messenger, WhatsApp, and Google Chat.

When exploring the reason for AIM’s downfall, we can look at game theory. How did other social media platforms become so big, and why was AIM never able to catch up? AIM’s chat experience was built into the desktop. While most other social media platforms were switching to mobile, AIM never figured out this shift. Because of this delay, the game strategy matrix became incredibly disadvantageous on AIM’s part. Although AIM’s dominant strategy may be to mimic the strategies of other platforms, the return will never be substantial enough to sustain the platform. On the other hand, Facebook and Google’s strategies are hardly affected by AIM’s strategies. This is an interesting development over time. 15-20 years ago, Facebook and Google may have been careful about choosing their strategies based on what AIM would do. Now, since it’s gotten to the point where the difference between the return values for AIM and a platform such as Facebook Messenger are incredibly big, AOL has decided that the dominant strategy is to let the messenger platform go. You can even relate the reason for the closing to game theory in the consumer mind. What is the dominant strategy when choosing between creating an account in AIM or Facebook. Since there are more users in Facebook, and Facebook is more accessible and convenient, the dominant strategy for must consumers would be to make an account on Facebook. There is no Nash equilibrium strategy where a consumer would choose AIM over Facebook, or any other big social media platform. This seems to be a pattern in our technology advancing society. For example, Toys R Us is also closing after the holiday. Although these closings may bring sadness to those who have grown up with these companies, it just shows how much technologically strong companies have an advantage.


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October 2017