It has been announced today that MSN and Yahoo are going to enable federation between their consumer IM services allowing MSN and Yahoo users to talk to their friends on the competing comsumer client without having to install the client themselves.

This functionality have been around for a while with LCS 2005 and Public IM Connectivity (PIC) but until now it has not been possible to do this in the consumer space.

With this alliance between MSN and Yahoo it will be interesting to see what happens with AOL and Google,  especially the latter as there has already been speculation about a joint venture of some sort between Microsoft and AOL. 

Take a look at http://online.wsj.com/article/SB112907349731466067.html for more information