Microsoft's acquisition of WebTV for $425 million at first seemed like the conspicuous consumption of a wealthy entrepreneur indulging himself with a new toy. Although the service represented a new frontier in media, its capabilities were immature by present day standards. WebTV, for example, could not access Web sites running Java applications. But what WebTV lacked in capability, it more than made up for in potential. The Internet-TV provider had successfully brought the information-rich public network into a ubiquitous household device. And with Microsoft's resources, the potential of this media hybrid became boundless-and so too Microsoft's influence on mainstream America.

As the chief architect of the Internet-TV medium, Microsoft could control both the context in which Americans view content and the "pipes" that they use to access it in this medium. Consumers would look to WebTV to organize and deliver their financial services information, for example, depending on the Internet-TV provider to select the financial services providers that best meet their needs. And if this selection service results in a transaction, Microsoft could also require a referral fee.

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