Netscape Takes Aim At Microsoft

AOL Time Warner Monday fired another salvo at arch-rival Microsoft Corp. when its Netscape
Communications Corp. subsidiary filed suit in the U.S. District Court in the District of Columbia seeking redress for Microsoft’s
anticompetitive business practices.

The lawsuit has been a long time in coming. Netscape’s Navigator, once the dominant player in the browser space, was knocked off the hill by
Microsoft, which introduced its Internet Explorer browser in 1995 and bundled it with its Windows operating system. Since then, in
aggregate, versions of Microsoft’s browser have claimed about 91 percent of the market while Netscape’s browser hangs in at about 4

Netscape’s complaint that Microsoft was unfairly competing by tying its browser to its highly popular operating system formed the
basis of the U.S. Department of Justice’s long-running (and still ongoing) antitrust suit against Microsoft (numerous other charges
were subsequently added). In April 2000, U.S. District Judge Thomas Penfield Jackson ruled Microsoft had violated section 2 of the Sherman Act by using its monopoly power to
block rivals from marketing their own operating systems or emerging technologies that threatened Microsoft’s market dominance. The
story didn’t end there, and Judge Jackson’s remedy was later overturned by an appeals court, but his findings of fact stood.

Netscape’s suit seeks injunctive relief “to prevent further antitrust injury to Netscape, and an award of treble damages to be
determined at trial.”

“Netscape’s lawsuit is a logical extension of the findings entered by the District Court and unanimously affirmed by the Court of
Appeals that Microsoft thwarted competition, violated the antitrust laws and illegally preserved its monopoly at Netscape’s
expense,” said Randal J. Boe, general counsel to America Online. “There is no question that Microsoft’s conduct violated the law and
harmed competition and consumers. Netscape’s lawsuit seeks not only an award of damages, but for the court to provide injunctive
relief that will help restore competition on the computer desktop. We support the efforts and goals of the non-settling state
attorneys general who continue to seek appropriate remedies to end Microsoft’s anticompetitive conduct and illegal activities. The
aims of Netscape’s lawsuit are entirely consistent with their efforts.”

Netscape is counting on the foundation laid by Judge Jackson’s findings and ruling by the U.S. Court of Appeals for the District of Columbia that upheld those findings to make its case.

In affirming Judge Jackson’s findings, the appeals court said, “Microsoft undertook a number of anticompetitive actions that seriously reduced the distribution of Navigator.” It also said that Microsoft’s actions have had “a significant effect in preserving (Microsoft’s) monopoly; they help keep usage of Navigator below the critical level necessary for Navigator or any other rival to pose a real threat to Microsoft’s monopoly.”

Specifically, Netscape claimed that due to Microsoft’s actions it lost browser licensing revenues; lost browser marketshare that would have led to other significant sources of revenues; its marketing and distribution costs were increased; it lost goodwill and going concern value; and it lost the profits it said would have existed.

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