The acquisition back in April of intelligent agent company Firefly Network Inc by Microsoft Corp (CI No 3,387) ended months of speculation over the future of the privately held company. Firefly’s advanced agent-based software is intended for building profiles of customers and filtering information. For example, its Passport product can be used to teach an ‘intelligent’ agent to find like-minded agents, and to track and mimic the habits of internet users. The agents can also use pattern matching to learn how to filter email or access content according to a user’s habits. Firefly was a spin off from the MIT Media Laboratory, and draws on work by the well-known Patti Maes. Some 70 staff are having to be persuaded to move across America from Cambridge, Massachusetts, to Redmond, Washington. Firefly, which seemed to be nearing the same kind of crisis that has affected other apparently high- flying software companies such as Netscape Communications Corp and Verity Inc, the search engine specialist. In each case, they have been faced with a difficult problem: how to scale up and supply consumer oriented software in large numbers and make a profit at the same time. In each case, low margins and the threat of Microsoft have been a problem. Microsoft has not disclosed the terms of the deal, which is surprising given the fact that it is almost certainly big enough to require mandatory reporting to the Securities and Exchange Commission when it goes through. Analysts put the value of Firefly at $100m back in the fall of 1997. What will Microsoft do with the software? The Microsoft division that negotiated the deal, Microsoft Interactive Media Group, runs Web sites and the MSNBC service, and so is certain to use the software for delivering content to users, and intelligent customer data to advertisers. But Microsoft could also draw on the software for inclusion into its Commerce Server package, or even in a forthcoming version of the client based Internet Explorer.
