A Counterweight to Microsoft
By allowing computer users to surf the Internet using a highly visual display, Netscape’s Navigator browser has transformed the medium from little more than an e-mail forum for academics into a marketplace and town hall for the world. Now, Netscape seems set for acquisition by one of the very companies it helped inspire, America Online. Federal regulators should permit the merger to go through in some version, for it’s the best short-term way to combat the giant Microsoft’s often stifling dominance over the computer industry.
Microsoft’s Windows software runs 90% of the world’s PCs. While there’s nothing intrinsically wrong with that kind of success, the Justice Department, in the current trial of its lawsuit against the company, has exhaustively documented how Microsoft has used its monopoly to shut out competitors.
It should be noted that AOL, no paragon of free-market virtue itself, has gobbled up online service competitors like CompuServe in recent years. But the AOL culture is distinctively different from Microsoft’s. Like Netscape, AOL owes its success to skillfully designed software that makes it easy for technologically phobic mortals to surf the Internet. Microsoft, in contrast, built its fortune on designing the complex coding that tells computers how to operate: Its more user-friendly features, like the graphical interface, were borrowed from others. Consumers would gain if Microsoft programmers, rather than working in a high-tech vacuum, were forced to compete with AOL’s consumer-oriented content providers.
On Monday, Microsoft’s general counsel, William Neukom, asserted that the AOL deal “pulls the rug out from under the government case,” declaring Washington should not be taking sides by going after Microsoft.
In fact, the regulators should continue to scrutinize all sides. Had the government not pressed its case against Microsoft, the software giant would surely have forged ahead with its predatory business tactics, an assault that prevented AOL from succeeding in an earlier attempt to merge with Netscape.
AOL too will need scrutiny, for it’s now negotiating a second deal that could allow development of a lucrative monopoly over business-to-business financial transactions conducted on the Internet. AOL would partner with Sun Microsystems to market and develop electronic commerce software.
No one--including government regulators--understands cyberspace well enough to intervene more forcefully. Federal regulators ought to regard AOL’s acquisition of Netscape as an interim, free-market re-sponse to Microsoft’s dominance. But unless the Justice Department continues to keep a watchful eye, consumers could end up with not one but two 800-pound gorillas in cyberspace.
