AOL Sues Microsoft for Antitrust Violations

UPDATED AOL, under the guise of Netscape Communications, has filed suit against Microsoft for "anticompetitive conduct against Netscape" during the height of the browser war that left the company out in cold and Microsoft with a 97 percent market share. The lawsuit cites seven counts since 1995 in which Microsoft allegedly committed illegal acts to promote Internet Explorer and harm Netscape Navigator. Netscape seeks retribution and to "restore competition lost in the operating system market and in the Web browser market because of Microsoft's illegal conduct."

"There is no question that Microsoft's conduct violated the law and harmed competition and consumers. Netscape's lawsuit seeks not only an award of damages, but for the Court to provide injunctive relief that will help restore competition on the computer desktop," said America Online General Counsel Randall J. Boe.

The Justice Department and several states reached a settlement with Microsoft last November, at which time AOL stated the "agreement fails to protect consumer choice and promote competition by leaving Microsoft free to continue to abuse its monopoly."

The suit, which was filed in the United States Federal District Court in the District of Columbia, claims "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."

Although Microsoft was not forewarned that such action would be taken and has yet to be served, company spokesperson Jim Desler said Microsoft was not surprised at the news. "We have consistently tried to work more closely with [AOL] in a variety of areas such as instant messaging and they have consistently turned us down," Desler told BetaNews. "AOL Time Warner has been using the political and legal system to compete against Microsoft for years."

Desler also disputed AOL's claims that the lawsuit would be of benefit to consumers. "Millions of Netscape and AOL customers use the Windows operating system every day and have a good experience. This lawsuit is not about consumers, it's really about a company that is concerned about its business performance and is really relying on the courts instead of innovating in the marketplace," he said.