Microsoft Challenges Government's Antitrust Suit with Netscape Acquisition Ruling

Strategic Insights -

The Microsoft Corporation argued in Federal court that the proposed acquisition of Netscape Communications Corporation by America Online undermines the Government's antitrust suit against the software giant. Microsoft claims that the deal demonstrates the health and vibrancy of the software industry, contradicting the Government's allegations of anticompetitive practices. However, the Government's lead attorney, David Boies, dismissed Microsoft's assertion, stating that the deal will not remove any obstacles to competition in the industry.

Key Takeaways:

  • Microsoft argues that the proposed acquisition of Netscape by America Online undermines the Government's antitrust suit, citing the deal as evidence of a healthy and vibrant software industry.
  • The Government's lead attorney, David Boies, dismissed Microsoft's assertion, stating that the deal will not remove any obstacles to competition in the industry.
  • Economist Frederick R. Warren-Boulton testified that Microsoft's actions, including exclusive contracts, have led to the disappearance of a firm like Netscape, the "brightest, newest star" in the software industry.
  • Microsoft lawyer Michael Lacovara suggested that the proposed acquisition undermines Warren-Boulton's argument that Microsoft has a monopoly in Internet browser software.
  • Warren-Boulton noted that the expiration of America Online's service contract in January will not change its incentive to distribute Microsoft software, highlighting the company's reliance on Microsoft's Web browser, Internet Explorer.
  • The software industry is shown to be so vibrant and fast-moving that Microsoft's overwhelming market share could be toppled at any moment, as suggested by Microsoft lawyer Michael Lacovara and Warren-Boulton's testimony.
  • Apple's success in selling the iMac computer, with 12.5 percent of buyers previously owning a Windows machine, was cited as evidence of the existence of fringe competitors in the operating system market.

Statistics:

  • About 22 percent of Americans who use the Internet reach it through America Online.
  • America Online uses Microsoft's Web browser, Internet Explorer, as the service's default choice.
  • 12.5 percent of people buying Apple's new iMac computer had previously owned a Windows machine.
  • More than 90 percent of the world's computers use a Microsoft operating system.

Sources:

  • The Microsoft Corporation
  • William Neukom, Microsoft's senior vice president for legal affairs
  • David Boies, the Government's lead attorney
  • Frederick R. Warren-Boulton, economist testifying for the Government
  • Michael Lacovara, Microsoft lawyer
  • News release from Apple Computer Company