MSN wasn't a worse alternative to ICQ, MSN was faster and came with Windows, making it both easier to keep running at the background on the weak hardware of the time (i remember launching ICQ and waiting waiting waiting at the splash screen with the rotating petal colors and then the main UI was a mess of buttons, icons and all sorts of bloat) and it was just easier to get into.
ICQ did release ICQ Lite which was lighter but by then that was too late - and even that couldn't combat MSN coming bundled with Windows, meaning that people who didn't have any IM suddenly now had one.