Facebook announced its new chat application earlier this week, and analysts believe the application may end AOL's reign as the king of instant messaging.

"From an AOL perspective, we fear that Facebook users will become addicted to Facebook chat and begin to decrease their usage of AIM," analyst Richard Greenfield said in a note to AOL investors.

The popular choice for years, AIM has an estimated 40 million U.S. users. Facebook has approximately 32 million members who could start using the new chat feature, which integrates notifications and friends' mini-feed activities into real-time.

Meanwhile, MySpace, Facebook’s biggest competitor, is also rumored to be developing an instant messenger service. While the big two duke it out, AOL acquired Bebo, the third largest U.S. social network, for $850 million last month.