Netscape suit against Microsoft in-depth

MacCentral brought readers news yesterday that AOL Time Warner subsidiary Netscape Communications Corp. has brought a suit against Microsoft Corp., citing anticompetitive practices. The suit seeks both an injunction against Microsoft and triple damages. MacCentral has obtained a copy of the brief Netscape filed in United States District Court for the District of Columbia.

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In the suit, Netscape recounted the history of the Web browser wars fought between the two companies. Positioning its own browser technology as a “middleware” solution, Netscape noted Microsoft’s adoption of “exclusionary licensing restrictions” that prevented some companies from including both Microsoft’s Internet Explorer and Netscape’s Navigator browser. Even Apple is dragged into the battle — Netscape noted that Apple was threatened by Microsoft to stop developing Office for the Mac unless Apple switched from Netscape’s browser to IE.

“Netscape was seriously damaged by Microsoft’s illegal conduct in at least the following ways: 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,” said Netscape.

The suit contains seven counts against Microsoft, including five invocations of the Sherman Act, a landmark piece of antitrust legislation.

Illegal Monopoly Maintenance of Intel-Compatible PC Operating Systems

Netscape claims that regardless of the United States Government’s own findings against Microsoft, the company continues to enjoy a monopoly of the Intel-based operating system space, since its Windows software is still the dominant OS used on the platform.

Further Acts of Illegal Monopoly Maintenance

Microsoft’s anti-competitive and exclusionary conduct is close to causing irrevocable harm to Netscape, the company said.

Illegal Tying of Windows and Internet Explorer

“Microsoft has illegally tied its Web browser product, Internet Explorer, to its separate and distinct Intel-compatible PC operating system product, Windows,” said Netscape. As a result, customers are restricted in their choice of Web browser, the company asserted.

Illegal Monopolization of the Web Browser Market

Netscape claims that Microsoft has, in fact, already enjoyed a monopoly position for Web browsers in the Windows market for the last several years. “Unless the activities complained of are enjoined, Netscape will suffer immediate and irreparable injury for which Netscape is without an adequate remedy at law,” said the company.

Attempted Monopolization of the Web Browser Market

“Microsoft has acted with a specific intent to monopolize, and to destroy effective competition in, the Web browser market. Microsoft’s anti-competitive conduct has had a dangerous probability of success and Microsoft has in fact achieved a dominant position in the market for Web browsers,” said Netscape.

The two remaining counts involve parallel violations of legal code in the District of Columbia, where the suit has been filed, and “Tortious Interference,” where Netscape claims that Microsoft’s actions and intent damaged contractual relationships it had already established or was seeking to establish with third parties.

In its request for relief, Netscape is hoping the court will enjoin Microsoft sufficiently “to prevent further antitrust injury to Netscape and to restore competition lost in the market for Web browsers, and to enable middleware platforms to compete with Intel-compatible PC operating systems.”

Netscape is also seeking triple actual damages plus interest, costs and attorney’s fees, and an award of punitive damages “sufficient to punish and deter Microsoft from repeating its unlawful conduct in the future” and any other relief the Court finds necessary.