Jeremy Pelofsky
WASHINGTON: AOL Time Warner Inc. sued Microsoft Corp. on Tuesday for damage
done to its Netscape Internet browser by violations of antitrust law found in a
separate government case against the software giant.
The 20-page lawsuit said the once-dominant Netscape, bought by AOL in 1999,
suffered from Microsoft's unfair promotion of its Internet Explorer browser,
which now tops the market.
A US appeals court in June upheld findings in the US Justice Department's
case against Microsoft that the company illegally used its monopoly in personal
computer operating systems to maintain its dominance.
"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," AOL General Counsel Randall
J. Boe said in a statement.
The Justice Department and nine states joining the government case have
reached a proposed settlement. Nine other states are seeking stiffer penalties
against the software giant.
Microsoft spokesman Jim Desler said the company had not reviewed the Netscape
lawsuit and could not comment on specific allegations but added: "AOL
purchased Netscape for $10 billion, now AOL wants to blame Microsoft for
Netscape and AOL's own mismanagement."
Browser war started antitrust case
The Netscape suit filed in US District Court for the District of Columbia said
Microsoft acted illegally beginning in 1995 and that "Microsoft's illegal
actions and the harms to Netscape are ongoing."
Netscape's suit seeks to prevent further anti-competitive behavior and asks
for treble damages, to be determined at trial, to make up for lost browser
licensing revenue and market share, among other things. "I don't see this
case as primarily about money. I see it as primarily about injunctive
relief," said Steve Salop, a Georgetown University law professor.
Microsoft bundled the browser with its Windows operating system, leading to
the government suit. The Justice Department had argued at trial that Microsoft
feared Netscape's popular browser could evolve into a computer platform that
could rival Microsoft's Windows operating system.
The appeals court cleared Microsoft of the specific charge of trying to
monopolize the market for Internet browsers but said Microsoft, through various
business practices, had unfairly competed with Netscape and other companies.
District Judge Colleen Kollar-Kotelly is due to hold hearings in March on
proposals by the nine states arguing for tougher penalties against Microsoft.
Around the same time she will hold separate hearings on whether the settlement
is in the public interest.
AOL is one of several companies due to testify on behalf of the states
seeking tougher penalties. After acquiring Netscape, AOL purchased the cable
television and media empire of Time Warner in 2001 to become AOL Time Warner and
is seen as one of Microsoft's chief competitors.
The holdout states want Microsoft to sell a cheaper, stripped-down version of
its Windows operating system as well as give competitors access to the inner
workings of the Internet Explorer browser and allow them to sell their own
customized version of the Web browser.
Earlier this month, another federal judge scuttled a proposed settlement of
consumer class-action suits against Microsoft. District Judge J. Frederick Motz
said the plan to have Microsoft donate computers and software to poor schools
could give the company an edge in a market where Apple Computer Inc. has
traditionally enjoyed a strong market share.
(with additional reporting by Andy Sullivan)
(C) Reuters Limited.