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Microsoft Seeks to Undermine Government's Antitrust Case in Trial

Strategic Insights

— 1 min read

Microsoft Corp. made its most concerted effort yet to convince a federal judge that the recently announced deal between America Online Inc., Netscape Communications Corp., and Sun Microsystems Inc. seriously weakens the government's antitrust case in its trial. The deal, announced in late November, involves America Online's purchase of Netscape for $4.2 billion and a side agreement to buy and jointly develop technology with Sun. The agreement has been characterized by executives of the three companies as a strengthening of their competitive muscle in software used to browse the World Wide Web, in electronic commerce, and in Internet technology.

Key Takeaways:

  • Microsoft's legal team presented comments from executives of America Online, Netscape, and Sun as evidence to support their claim that the deal weakens the government's case.
  • The deal was characterized as a strengthening of the competitive muscle of the three companies in software used to browse the World Wide Web, in electronic commerce, and in Internet technology.
  • Microsoft's lawyer, Michael Lacovara, repeatedly tried to get economist Franklin Fisher to concede that the deal poses a genuine threat to Microsoft's dominance in the personal computer software business.
  • Fisher maintained that Microsoft has a monopoly in the personal computer operating system market with its Windows family of products and that it has illegally used its market power to defend that monopoly.
  • Fisher allowed that the emerging technology championed by the group, the combination of Sun's Java software and Netscape's Web browser, could pose a serious challenge to Microsoft in the long run.
  • Microsoft insists that the deal changes the competitive landscape and undermines the government's claim that Microsoft has a resilient monopoly.
  • The trial is a nonjury trial, and Judge Thomas Penfield Jackson will decide the outcome.

Statistics:

  • The deal involves America Online's purchase of Netscape for $4.2 billion.
  • The deal also includes an agreement for America Online to buy and jointly develop technology with Sun.
  • The trial is a nonjury trial, and Judge Thomas Penfield Jackson will decide the outcome.

Sources:

  • "Microsoft Seeks to Undermine Government's Antitrust Case in Trial", STEVE LOHR, NEW YORK TIMES, WASHINGTON.

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