AOL Unit Files Suit Against Microsoft
An AOL Time Warner Inc. unit filed a civil antitrust suit Tuesday against Microsoft Corp. claiming the Redmond, Wash.-based giant’s monopolistic behavior nearly pushed AOL’s Netscape Internet browser out of the market.
The lawsuit--filed by AOL subsidiary Netscape Communications Corp. in U.S. District Court for the District of Columbia--draws heavily from federal court findings that Microsoft’s business practices amid the browser wars of the 1990s violated federal antitrust laws.
A federal judge ruled in April 2000 that Microsoft used anti-competitive means to thwart browser Netscape. A panel of seven appellate judges upheld eight separate antitrust violations by Microsoft a year later.
“We have a fiduciary responsibility to our shareholders, and a responsibility to consumers, to pursue this case,” said AOL executive John Buckley. “There are still issues that obviously have yet to be resolved. We believe it’s better to file this action now.”
Microsoft officials said the complaint is merely a sign that AOL is trying to compete with Microsoft in the courts rather than the marketplace.
“They’ve timed today’s filing to interfere with the ongoing efforts to bring our [other] anti-trust case to a conclusion,” said Jim Desler, a spokesman for Microsoft. “This lawsuit is not about consumers. It’s really about a company concerned about its business performance.”
AOL, which bought Netscape for $4.2 billion in 1999, is seeking unspecified damages that legal experts say could top hundreds of millions--and possibly billions--of dollars. If AOL wins the case and can prove actual financial damages in court, the company would be entitled to triple that amount, according to federal antitrust laws.
Netscape Navigator, once the dominant Internet browser, has been overshadowed by Microsoft’s Internet Explorer. About 66 million U.S. home PC users rely on Explorer, compared with 16 million for Navigator, according to the latest figures from Internet analyst Jupiter Media Metrix. At work, Explorer users outnumberNavigator users 29 million to 10 million.
In the complaint, Netscape asked for a jury trial and an immediate injunction against Microsoft’s predatory behavior, both past and future. Netscape claimed that “it lost browser licensing revenues; it lost browser market share ... and it lost the profits that would have existed if Microsoft had not acted illegally.” Ultimately, a judge will decide the amount of any damages and conduct remedies. Netscape’s complaint suggested the conduct remedies could be derived from a proposal filed last year by nine states and the District of Columbia--such as forcing Microsoft to release a version of Windows without its own middleware products.
Michael Gartenberg, a Jupiter analyst, said AOL is probably less concerned with recovering damages than with creating a new impediment to Microsoft’s efforts to dominate online software with its .Net initiative, which hopes to provide a multitude of Internet services, according to individual references.
“It’s not about money in the past as much as about potential technologies in the future,” he said. “Microsoft’s legal troubles are not over. There are going to be further vanquished competitors that will continue to bring up these challenges going forward.”
He predicted that Sun Microsystems Inc. and other competitors may file follow-up suits on a range of technology issues, and noted that complaints by Apple Computer Corp. recently helped scuttle a $1-billion tentative deal between Microsoft and the state attorneys general over 100 consumer antitrust lawsuits.
Private antitrust actions often are filed after a government lawsuit against the same target has been completed or is well advanced, to save the necessity of providing proof for many aspects of the case, said Utah Assistant Atty. Gen. Wayne Klein.
Utah, like eight other states, has opted to pursue its own antitrust action against Microsoft, rather than join the Department of Justice effort working its way through federal court. Klein said that AOL would benefit greatly from the government’s case.
“To the extent that findings were upheld on appeal--and most of them were--that gets AOL part of the way there,” Klein said.
AOL still will have to establish that it was directly victimized by Microsoft’s anti-competitive actions.
“The liability part of the lawsuit has been resolved. They just have to focus on proving harm and on damages,” Klein said.
