Net2Phone Powers Telephone Service on MSN.

Business Editors

NEWARK, N.J.--(BUSINESS WIRE)--July 20, 2000

Microsoft and Net2Phone Unveil Free PC-to-phone Calling in the

U.S. and Canada as an Integrated Part of New MSN Messenger 

3.0 Immediately Available

Net2Phone Inc. (NASDAQ: NTOP) today announced that Microsoft Corp. (NASDAQ: MSFT) will integrate Net2Phone's PC-based client software into the latest version of MSN Messenger Service 3.0, the only free(a) Internet instant messaging (IM) service with simple one-click free(a) long distance phone calls to the US and Canada from nearly anywhere in the world.

MSN Messenger Service 3.0, released today, includes a new "Call" button which allows users to place PC-to-PC or PC-to-phone calls to any of their online buddies using Net2Phone's award-winning software and technology. PC-to-PC calls are free to anywhere in the world, and PC-to-phone calls are free for calls to any telephone in the United States and Canada.

Net2Phone's client software is embedded into the MSN Messenger software, so there is no need to download additional software in order to place telephone calls from MSN Messenger. In order to place any Internet phone call, users need a sound card, microphone, and speakers.

This is the first time that Net2Phone's PC-to-phone service is being offered for free on calls to any telephone in the United States and Canada.

"By working with Net2Phone to offer free telephone service through MSN Messenger, MSN continues to deliver valuable services that help consumers get more from the Web," said Yusuf Mehdi, vice president of the Consumer Group at Microsoft. "The new PC-to-PC and PC-to-phone capability provides consumers with yet another easy and integrated way to communicate they way they want with the people they care about."

When users download and open the new MSN Messenger Service, they will have many options to communicate, two of them being the ability to call a buddy on his computer or telephone. Users can choose to list as many of their telephone numbers as they wish in their profiles (for example, home number, business number, mobile number), allowing their buddies to contact them wherever they are.

Individuals can also choose to call people who are not MSN Messenger Service users using the "Call" feature. By opening up the telephone keypad, users can dial the telephone number of the individual they are calling, and can call anyone in the United States and Canada at no charge.

With more than 18 million users, MSN Messenger Service is the easy-to-use Internet messaging service that provides consumers with instant and private contact with their friends, family and colleagues. It provides the ultimate way to communicate with others, puts users in control of their communications and is simple and fun to use. Users can download the latest version of MSN Messenger at messenger.msn.com.

"Our integration with MSN Messenger Service makes the convergence of the Internet and the Telephone network a reality," said Jonathan Fram, President, of Net2Phone. "By embedding the most natural form of conversation - voice - with MSN Messenger, we believe users will experience a new dimension in instant messaging and will use the service even more. Not only does the inclusion of Net2Phone in MSN Messenger make the product richer, but it also adds a layer of functionality by enabling MSN users to call their contacts either on the PC or on the telephone."

"We have stated that we would roll out a free PC-to-phone offering with a leading company who would provide us with the eyeballs and omnipresence that a free PC-to-phone offer needs. We believe that this integration with MSN Messenger Service will attract more Internet telephone users than ever before, and will extend Net2Phone's lead as the No. 1 provider of voice-enhanced services on the web today," said Howie Balter, Chief Executive Officer of Net2Phone.

Net2Phone is a leading provider of voice-enhanced Internet communications services to individuals and businesses worldwide. Net2Phone enables people to place low-cost high quality calls from their computer, telephone, or fax machine to any telephone or fax machine in the world. Net2Phone develops and markets technology and services for IP voice and e-commerce solutions for the web and other IP networks. For more information about Net2Phone's products and services, please visit www.net2phone.com.

About MSN

MSN is an integrated network of content and services that help consumers get more from the Web - any time, any place and from any device. MSN is the most popular destination on the Internet, attracting 201 million unique visitors worldwide during June, and is available in 33 markets in 17 languages - a broader global presence than any other portal. MSN Internet Access is the highly rated, fast and reliable way for consumers to get on the Web, now with 3 million subscribers. MSN delivers the Everyday Web experience by providing more than just the basics for new Internet users, with benefits for more advanced users looking for richer functionality. Best-of-breed services include MSN Hotmail, the world's largest e-mail system, with more than 67 million active accounts; MSN Messenger Service, the fastest-growing instant messaging service, with more than 18 million users; MSN Search, the second most popular search service on the Web; MSN Mobile, the customizable wireless information service; the award-winning MSN MoneyCentral(TM) online personal finance service; MSN eShop, the one-stop online shopping resource; MSN Custom Web Sites, the easy way to share information on the Web; and many other widely used services that make MSN a leading innovator of Internet technologies. MSN is located on the Web at http://www.msn.com/.

(a) Connect time charges related to Internet access may apply

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements include, among other things, Net2Phone's expected operating performance for the three months ending July 31, 2000 and thereafter. Actual results could differ from those projected in any forward-looking statements due to numerous factors. Such factors include, among others, the inherent uncertainty of financial estimates and projections, the competitive environment for Internet telephony, changes of rates of all related telco rates and services, legislation that may affect the Internet telephony industry, and Net2Phone's ability to operate the services described on a large scale commercial level. The forward-looking statements are made as of the date of this press release, and Net2Phone assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Investors should consult all of the information set forth herein and the other information set forth from time to time in Net2Phone's reports filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934.