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  AOL's Netscape sues Microsoft
Time: 16:20 EST/21:20 GMT | News Source: CNET | Posted By: Julien Jay

Netscape Communications, a division of AOL Time Warner, filed suit against Microsoft on Tuesday, claiming that the software giant's business practices have harmed it. The lawsuit is based on court findings that Microsoft's business practices amid the infamous browser wars of the 1990s violated two sections of the 1890 Sherman Antitrust Act. In April 2000 a federal judge ruled that Microsoft used anticompetitive means to thwart browser Netscape. In June 2001, a panel of seven appellate judges upheld eight separate antitrust violations by Microsoft. AOL acquired Netscape in 1999. The media titan is asking for a jury trial and is seeking damages but did not specify an amount in the suit, filed in U.S. District Court for the District of Columbia. AOL Time Warner also asked for an injunction against Microsoft's alleged antitrust violations, both current and future. The judge in the case ultimately would decide the nature of the injunctive relief, which AOL Time Warner suggested could be derived from a remedy proposal filed last year by nine states and the District of Columbia. One option: forcing Microsoft to release a version of Windows without its own middleware products, such as a Web browser, media player or instant messenger.

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#1 By 3339 (206.216.3.134) at 1/22/2002 4:40:49 PM
A federal criminal antitrust verdict has been issued against Microsoft; why wouldn't the individual companies who were affected by this pursue civil litigation in order to receive specific redress to the affects on their company?

I know it's JUST CRAZY to imagine this, but can you guys divorce yourselves from your love of MS and your hatred of AOL for just long enough to see that this is obvious, and a slam dunk case.

And that Sun and Be and maybe others will be doing this too in time...

#2 By 3339 (206.216.3.134) at 1/22/2002 4:48:26 PM
Sunglasses, this is a proposed INJUNCTION. In other words, termporary restrictions put on MS while the case is litigated. Whether or not something can be uninstalled or whether or not AOL could sign contracts with OEMs has nothing to do with whether or not MS's abuse of its monopoly power had a negative affect on AOL.

This Injunction probably won't be granted, but it's standard fare when pursuing a case to say the actions which caused injury should not be allowed until it has been proved one way or the other.

#3 By 135 (209.180.28.6) at 1/22/2002 4:50:25 PM
This makes me laugh.

#4 By 3 (62.253.128.4) at 1/22/2002 4:52:35 PM
hmmmm my personal view

Bundling IE with Windows destroyed Netscape - there is no doubt about that..its something Microsoft should not have been allowed to do..they could have won the browser war without doing so because IE3/4 were superiour to netscape, they decided to go a different more dirty route to gain the share.

So my view is that netscape should sue - i think if anyone here had the same thing happen to their company in this kind of way, they would have done the same.

#5 By 3339 (206.216.3.134) at 1/22/2002 4:53:36 PM
#6, the case is on behalf of Netscape so the choices made by AOL will have no bearing on the case-- even if those Netscape people are now AOL people. If anything, Netscape will have a willing witness who can testify as to MS's agressiveness in creating exclusive contracts.

What you suggest would be like saying Be no longer has a case against MS because Palm swallowed them up and won't be releasing BeOS--so obviously Palm doesn't believe Be is any good. (Which clearly isn't true.)

#6 By 3 (62.253.128.4) at 1/22/2002 5:03:22 PM
#14 - yeah that is all very well saying that - but how would it be fair now? - A company would not only have to release a better browser than IE (and it is the best browser no doubt) - but they would also have to have the fair chance at people using it, but how can they get a fair chance? - I doubt Microsoft would let them bundle it with Windows.

#7 By 3339 (206.216.3.134) at 1/22/2002 5:09:59 PM
The only question is what AOL is going to go after. Thurott says that they can seek remedial measures to rectify the situation (hence, the injunction proposal and a remedy along the lines of the DOJ settlement) PLUS as much as _three_ times the damages sustained. So what sort of pricetag do you put on Netscape considering it started the .Com Boom (don't know what its valuation was when IE was bundled with Windows) and then ultimately plummeted to the point where it was purchased by AOL?

#8 By 3339 (206.216.3.134) at 1/22/2002 5:16:05 PM
That would be my guess too.... but I think it will actually be less... maybe just... ONE billion.

This post was edited by sodajerk on Tuesday, January 22, 2002 at 17:16.

#9 By 1868 (141.133.144.204) at 1/22/2002 5:17:34 PM
I totally agree with post 1. I mean I am all for AOL having the right to go to court, but this is just silly-they went after MS on the same issue 4 years ago. Well, you have to wonder if this isn't somekind of spat just between to ego driven ceos (Steve Balmer and Steve Case).

#10 By 3339 (206.216.3.134) at 1/22/2002 5:21:58 PM
What case are you talking about, Zeo01? Anyway, this isn't an AOL case, this is a Netscape case. Netscape was bought by AOL in Nov. of '98.

#11 By 3339 (206.216.3.134) at 1/22/2002 5:36:18 PM
interdev159, you could read the actual court decisions that clearly state that although Netscape had substantial distribution of its software, the barriers erected by MS at the desktop and the actual hooks into the OS and other tactics which can be declared anti-competitive were what eroded Netscape's marketshare.

If anything, wide distribution supports the argument that control of the OS and desktop are all that matters. In other words, Netscape was COMPETING its butt off by distributing tens of millions of installs, but Microsoft's ANTI-COMPETITIVE tactics meant these efforts were useless.

Having widely available distribution doesn't inherently negate the fact that the competition is using tactics to illegally crush your market.

#12 By 3 (62.253.128.4) at 1/22/2002 5:36:53 PM
#23 - where is there a chance for a fair competition now that IE is bundled with Windows? Allow both Netscape and IE to be bundled with people able to choose wouldn't be fair either as there are other browsers.

The problem is with IE being bundled in Windows - I know for sure that my parents/family members would not use anything other than IE - not because they love it - but simply because as it is part of windows they assume there isnt anything else TO use.

#13 By 3339 (206.216.3.134) at 1/22/2002 6:50:32 PM
#27, this is a very silly argument that anyone but a softie can see through. What you are saying is that Microsoft can erect as many barriers to entry as they want and use as many anticompetitive tactics that they can as long as they leave some entry point open for a competitor, in this case, at the OEMs. (in fact, the courts said if MS does any ONE thing which is anticompetitive wihtout substantial benefit, it's illegal.)

You then say AOL could BUY its way into market dominance without noting that this is in fact anti-competitive leverage on MS's part. What you are saying is: the only door MS opened was for other companies to spend a lot of money when they have to pay none. Why should AOL or any other browser provider have to BUY their way into markets while Microsoft gets to enter them for free? Complete silliness.

Can't a softie actually make a logical, factual, legal argument for Microsoft when it comes to antitrust matters?

#14 By 3339 (206.216.3.134) at 1/22/2002 7:05:57 PM
Roy, this is funny; I remember arguing with people here who couldn't understand why it was an issue since Netscape didn't charge for the browser so how could they lose money anyway. Let's be clear, Netscape provided the browser FREE for individual users and academic purposes. It only charged for a package with additional features (Composer, etc.) and for commercial volume licenses if being used by businesses.

I don't even think MS tried to pass off this theory on the court (and they tried some ridiculous ones) so I think you're along way from demonstrating that this is a valid "theory."

Also, note above where I state that the court shouldn't, isn't, and can't be concerned about factors internal to Netscape. The question is: did Microsoft do anything anti-competitive to harm Netscape in the marketplace? They certainly did.

#15 By 3339 (206.216.3.134) at 1/22/2002 7:54:48 PM
HERE COME THE SOFTIES!

#16 By 2 (24.54.153.167) at 1/22/2002 8:15:11 PM
I agree Roy #28. I never would have paid for Netscape. I remember trying the trial back when IE 3 came out and I had tons of problems...

#17 By 3339 (206.216.3.134) at 1/22/2002 8:44:50 PM
stu, let's do this again, (1) all of this was covered in the antitrust case; the new judge is not going to be able to go against this decision. (2) the judge will be doing zero in terms of weighing in Netscape's inadequacies of which there were many-- again, I point you towards the decisions handed down. Even though the decisions go through what you state, they actually go through these issues in order to dismiss them as irrelevent. MS kept bringing this stuff up to suggest that (1) it did nothing wrong and (2) Netscape ruined themselves. The Court clarified the law, and if it needs to happen again it will: what is at question is whether or not Microsoft engaged in any activity to deny marketshare to Netscape. They did this many ways: freely distributing the product, tying their browser to their OS, making it difficult to install the rival browser, exclusive contracts with OEMs, exclusive contracts with ISPs, exclusive contracts with ISVs, etc...

All of these tactics, from the perspective that Microsoft is a monopoly are illegal. One of them would be enough, Microsoft engaged in all of them.

Meanwhile, there is no way to determine whether or not Netscape could have responded to Microsoft in like fashion (making it a platform for branding,etc...) because they were forced to poor money into more advertising, more distribution, more layers, more developers.

For those of you who see that this is the LAW, and that it has been PROVEN in FEDERAL COURT, and that the TESTIMONY directly pertains to and revolves around NETSCAPE therefore Netscape will not even need to introduce NEW EVIDENCE, you may be interested in what AOL is going after (they haven't specified a $ amount yet)... For those of you who cannot understand or believe this, you're going go apesh1t when you see this...

"it lost browser licensing revenues; it lost browser market share that would have led to other significant sources of revenues, including portal revenues and revenues from its enterprise software and products businesses; its marketing and distribution costs were significantly increased; it lost goodwill and going concern value; and it lost the profits that would have existed if Microsoft had not acted illegally to prevent Netscape's browser technology from providing a competitive alternative to Microsoft's monopoly operating system as a development platform"

Maybe I was wrong before, this is going to be many billions of dollars!

#18 By 4379 (208.61.41.238) at 1/22/2002 8:58:23 PM
AOL should filed suit against themselves. They are the biggest providers for online service and they bundle IE. Why not start with adding Netscape to the service and see where things go from there?

It's all a joke, ultimately people will use what they want not what MS or AOL gives them.

#19 By 3339 (206.216.3.134) at 1/22/2002 9:14:57 PM
Oh, stubear, I should clarify: the judge will consider Netscape's business decisions as a mitigating factor, but only in determining the cash value of a remedy -- but definitely not in the guilt or innocence of MS. This is where the case will get ugly with AOL way-overestimating the potential lost value from predation -- MS will rebut by way-undervaluing what Netscape could have been. This is where the bulk of the legal work will be in the case and could drag on.

It'll be interesting to see if AOL gets anywhere with the injunction or if they can get marketplace remedies in action before the gov't can as well.

#20 By 135 (208.50.201.48) at 1/22/2002 10:47:29 PM
There appears to be a number of misunderstandings here, most of them are being propogated by sodajerk.

- Bundling has never conclusively been proven to be a barrier to entry. The only damning evidence used in court had to do with preventing OEMs from installing additional software on top of Windows... not the bundling itself.

- There is little to no evidence that Netscape "deserved" a market. The free market does not reward incompetence, which Netscape had in spades.

- Netscape had the majority of the marketshare even after Microsoft started bundling. It wasn't until the release of the buggy Netscape 4.x that they began losing in the market.

- Netscape had a very difficult time selling their browser even when they had majority marketshare. Most users were personal, and it was available as a free download.

- AOL choose Microsoft's browser over Netscape because of their(NS) arrogant attitude towards branding. i.e. Microsoft was willing to just let AOL use their browser. Netscape wanted their brandname plastered everywhere on AOL's website. That *hurt* Netscape.


I just think it's unfortunate that AOL doesn't believe in free market competition by spending their R&D money on producing a better product. Instead they turned Netscape browser over to the Open Source market, and are now disappointed that free R&D doesn't produce results quickly.

#21 By 135 (209.180.28.6) at 1/23/2002 10:44:16 AM
It's amazing the kind of archives that people have out on the Internet. Here's one that explains explains why Netscape never expected to receive money for the browser, and how Microsoft giving it away for free wasn't that unexpected.

Netscape was originally known as Mosaic Communications.

http://www.atariarchives.org/cfn/06/08/0439.php

" ** Mosaic Comm to Release Software **

Mosaic Communications Corp., formed by developers of the Internet's
popular Mosaic software, is expected to release at no charge its own
version of the program in a bid to establish it as a standard for
navigating parts of Internet.

Marc Andreessen, who started MCC with Silicon Graphics Inc. founder
James Clark, said "We want as many people to use the software as
possible."

Mosaic, which provides a graphical interface for navigating Inter-
net's World Wide Web, already is freely available on the network.
Sandberg adds, "It has become so popular -- about 70,000 Internet users
download it monthly -- that more than a dozen software companies have
licensed the university-developed software to enhance it for commercial
use."

Andreessen said his company will give users a free version of its
Mosaic Netscape client software because "that's not where the money is
anyway," adding MCC plans to sell the server software to companies
seeking to be suppliers of information and goods on the network.

Andreessen estimated Mosaic Netscape is about 10 times faster than
any current version of Mosaic. To run Mosaic, users must have a special
"SLIP" or "PPP" connection, which only some Internet access providers
offer and which typically costs more than $40 a month.

"Even so," says Sandberg, "the software can be slow to access infor-
mation -- sometimes taking several minutes to download complex graphics
files. Only users with faster connections, such as corporations and
universities, can receive information quickly."

Mosaic was developed by Andreessen and others two years ago at the
National Center for Supercomputing Applications at the University of
Illinois. Swamped with interest, NCSA licensed the software company
Spyglass Inc. to handle all relicensing.

Andreessen, who has since hired from NCSA five other programmers of
the original Mosaic, says his company's version has "been completely
rewritten from scratch" and "doesn't contain a line" of the original
code."

#22 By 3339 (206.216.3.134) at 1/23/2002 12:34:17 PM
Stubear, try reading the Appeals COurt decision--you are rather wrong.

"NOWHERE IN ANY DECISIONS HAVE MICROSOFT BEEN FOUND GUILTY OF ANTI-TRUST VIOLATIONS CONCERNING BUNDLING OF PRODUCTS!!!"

The Appeals Court said that bundling wouldn't inherently be illegal, but that as a monopoly, Microsoft has further restrictions placed on it in the marketplace. They did say that the bundling of the browser was done in such a way that there was no derived benefit, but that it served as a barrier to other browsers (i.e. commingling code). To this day, MS knows but is unwilling to admit that not all of the functions in the html and explorer dlls cannot be utilized by the system.

Hence, the Sherman Antitrust Section 1 Charge that the bundling itself was not illegal, but in the Section 2 charge of abusing its monopoly position, it was determined that the bundling scenario created by MS was illegal because it was largely intended to be a barrier.

#23 By 3339 (206.216.3.134) at 1/23/2002 2:11:01 PM
Peter: The question is did MS do anything illegal, anything anticompetitive. It's not a matter of whether or not Netscape did anything stupid, pathetic, or slow. Instead of attacking Netscape, provide a legal defense for Microsoft's actions. It's clear MS was threatened by Netscape, it's clear they pursued many strategies to kill Netscape. Some of these actions were legal, some were illegal, some were illegal only because of Microsoft's monopoly position. To think otherwise is to live in the past prior to 5 years of legal proceedings.

These lawsuits aren't going away (not because it's a money maker (who has made any money suing MS ever? few if any)) but because there is very clear legal ground.

Microsoft is lucky they aren't involved in more lawsuits; of course, there are more to come.

#24 By 3339 (206.216.3.134) at 1/23/2002 4:05:14 PM
What are you people trying to assert about NS 6; this all pertains to what was done in 96-97. The last 3-4 years that you are describing is exactly the result that Netscape is talking about. I don't think anyone would say that Netscape wasn't crushed into little bits until 6 beta came out; I think people would say that when Netscape was at version 4, and IE at 3--this is the crucial time.

#25 By 4209 (163.192.21.3) at 1/23/2002 4:58:28 PM
SodaJerk, so you are saying that MS should have bundled someone elses browser or not bundled there own? Well, for one the first part will never happen and two if they did not bundle there own, who knows what the Internet would be today. Most people don't buy a computer and then spend another $30 so they can get on the internet. Since no noob knows how to go about getting the browser, MS made it easy. Did you want them to put a big sign up in there OS that told the new user to go look at NS. Not gonna happen, that is like GM telling its customers to go look at Ford's A/C system and see if they want that instead of GM's A/C system. MS was found a monopoly in there OS division. Since there really is no other OS out there. Furthermore this allowed them to use there OS Monopoly to tell OEM's what to include with there OS install. Because without the MS OS on there machines, what were they supposed to use? That is what was bad, and yes they told OEM's not to put NS on the boxes when they were sold. So there is the real problem, now just because they did this did not make NS fail. NS could have advertised there browser, they could have let people know they can download it for free. And as others say, most noob computer buyers would ask someone with more knowledge what to use, maybe relying on there ISP to tell them what they should use. As far as I know, most ISP's still have downloads, or links to them, of NS available on there sites. I used to use NS and I switched to IE, because the browser did not have as many bugs or issues. I used NS and recommended it up untill version 4.7, then I got fed up and switched to IE. I also told people to use IE after that. So it is not really MS's fault, as much as AOL/NS would like to think it was, that NS failed. It was there own fault and maybe they should just sue the shit out of themselves.

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