Why ICQ Died: Lessons From the First Instant Messenger

At its peak, ICQ had 100 million users. It was the first mainstream instant messenger, the platform that taught the world how to chat online. According to Crunchbase, AOL paid $407 million to acquire it. By 2024, it was dead. The lessons about network effects, platform ownership, and user lock-in are still playing out in every messaging app on your phone.

ICQ didn't just die from competition. I've watched it happen in real time over 30 years of building platforms. It died from a specific sequence of decisions that any platform builder should study. The pattern repeats in every generation of communication tools, and we're watching it happen again right now.

The Rise: First to Market Matters

ICQ launched in November 1996, created by five Israeli developers at a company called Mirabilis. The name was a play on "I Seek You" - and the pun worked because the concept was novel. Before ICQ, real-time chat meant IRC channels or being logged into the same service at the same time as whoever you wanted to talk to.

ICQ changed this. You got a unique number (mine was eight digits). You could see who was online. You could send a message and have it arrive instantly. This sounds trivial now, but in 1996 it was a revelation. The BBS culture I grew up in had message boards and email, but nothing that felt like a real conversation.

By 1998, ICQ had 12 million users. By 2001, that number hit 100 million. Mirabilis had invented a new category and dominated it completely. The "uh-oh" notification sound became as recognizable as the AOL "You've got mail."

The Acquisition: When Owners Change

In June 1998, AOL acquired Mirabilis for $287 million upfront and $120 million in performance payments. At the time, this seemed like a brilliant strategic move. AOL was the dominant internet service provider. ICQ was the dominant instant messenger. Together they would be unstoppable.

But AOL had a problem: they already had AIM, their own instant messenger, which they'd launched in 1997. Now they owned two competing products. Internal politics being what they are, AIM got the resources. ICQ got neglected.

This is a pattern I've seen repeatedly in my experience advising startups on M&A. Acquirer buys competitor. Acquirer already has competing product. Acquired product slowly starves. Here's what actually happens: the users who made the product valuable become casualties of corporate strategy.

The Messenger Wars

As Tedium documented, the early 2000s saw what analysts called the "messenger wars." AIM, ICQ (both owned by AOL), MSN Messenger, and Yahoo! Messenger all competed for users. At its peak in 2006, AIM controlled 52% of the market. But none of these services could talk to each other.

This was deliberate. AOL actively blocked Microsoft's attempts to connect MSN Messenger to AIM. Microsoft tried to reverse-engineer the protocol; AOL changed it. This cat-and-mouse game continued for years. The FCC even proposed requiring interoperability as a condition of the AOL-Time Warner merger.

The lack of interoperability seemed like good business at the time - lock users in, keep competitors out. But it also prevented any network from reaching critical mass. Users had to run multiple messengers to talk to different friend groups. This fragmentation would eventually open the door for new entrants.

Death by a Thousand Cuts

ICQ's decline wasn't sudden. It was gradual and multi-causal:

Corporate neglect. After the acquisition, ICQ's founding team left. Development slowed. Features that users wanted took years to arrive. Meanwhile, competitors were innovating rapidly.

Software bloat. ICQ became notorious for installing unwanted software, showing ads, and generally treating users as products rather than customers. The clean, simple messenger became a bloated mess. I've built products that avoided this trap and seen others that didn't - this reminded me of the layer tax I've written about - complexity accumulating until the product collapses under its own weight.

Regional fragmentation. While ICQ declined in the US and Western Europe, it remained dominant in Russian-speaking countries. This created a strange situation: the product was effectively two different things in two different markets, making coherent strategy impossible.

Mobile missed. This was the fatal blow. ICQ was built for desktop computers. When smartphones emerged, ICQ was slow to adapt. WhatsApp launched in 2009 with a mobile-first design. By the time ICQ had a decent mobile app, the migration was already happening.

The Sale and the Long Goodbye

In 2010, AOL sold ICQ to Russian internet company Mail.ru (later VK) for $187.5 million - less than half what they'd paid twelve years earlier. By 2013, active users had dropped to 11 million from the peak of 100 million.

VK tried to revive the platform. They released new apps, added features, modernized the interface. But the network effects that had made ICQ dominant now worked in reverse. Your friends had moved to WhatsApp, Facebook Messenger, or Telegram. Why would you use ICQ when nobody you knew was on it?

On June 26, 2024, ICQ finally shut down. The service that had pioneered instant messaging was officially dead, 28 years after it launched.

What ICQ Got Right

Before cataloging the failures, it's worth noting what ICQ invented that every modern messenger still uses:

• Presence indicators. Online, away, busy, invisible - ICQ created these concepts.
• Buddy lists. A persistent list of contacts with their status visible at a glance.
• Offline messages. Send a message even when the recipient isn't online.
• User search. Find people by interest, location, or other criteria.
• File transfer. Send files directly to contacts.

These features seem obvious now. They weren't in 1996. ICQ's influence on modern messaging is profound, even if the platform itself is gone.

The Lessons That Still Apply

ICQ's failure teaches several lessons that are still relevant:

Network effects cut both ways. The same dynamics that make a platform dominant can accelerate its decline. When users start leaving, the value decreases for everyone remaining, creating a death spiral.

Platform ownership matters. ICQ's users didn't own their contact lists, their message history, or their identity (that eight-digit number). When the platform died, all of that disappeared. This is still true for most messaging platforms today.

Mobile transitions kill incumbents. Desktop dominance didn't translate to mobile dominance. Every major platform transition creates opportunities for new entrants and dangers for incumbents. We saw this in the dot-com crash and we'll see it again.

Acquisition often means death. Being acquired by a company with competing products is frequently fatal. The acquirer's incentives favor their existing product, not yours.

User lock-in has limits. ICQ thought their network effects would keep users forever. But switching costs decrease when the new platform is dramatically better (mobile-first) and when network migration reaches a tipping point.

Network Effect Health Check

Is your platform building defensible value or heading toward ICQ's fate?

The Current Landscape

Today's messaging landscape looks different but rhymes with the messenger wars. WhatsApp has 2+ billion users. Facebook Messenger, iMessage, WeChat, Telegram - all have hundreds of millions or billions of users. All are siloed. None talk to each other.

The EU's Digital Markets Act is attempting to force interoperability, the same thing the FCC considered for AOL-Time Warner. Whether it will work remains to be seen. Interoperability creates technical and privacy challenges that regulators may underestimate.

Meanwhile, the platforms are adding features - payments, shopping, AI assistants - to increase lock-in and justify their valuations. The pattern continues.

"ICQ pioneered instant messaging, achieved 100 million users, and was acquired for $407 million. Then it slowly died through corporate neglect, software bloat, and failure to adapt to mobile."