Microsoft's Antitrust Trial: AOL's Crucial Role Revealed

The antitrust trial involving Microsoft, the U.S. Justice Department, and 20 states has highlighted the pivotal role America Online (AOL) played in the browser wars between Microsoft and Netscape Communications Corp. In crucial testimony, AOL senior Vice President David Colburn revealed that the company's decision to partner with Microsoft in 1996 was largely driven by the software giant's market power, rather than the superior quality of its Internet Explorer browser. The deal, which vaulted Microsoft's browser into a primary slot for AOL customers, came at the expense of Netscape, which had also sought to make a deal with AOL.

Key Takeaways:

• AOL's decision to partner with Microsoft in 1996 was driven by Microsoft's market power, not the quality of its Internet Explorer browser.
• The deal gave Microsoft a highly valued icon on its Windows 95 desktop and access to AOL's extensive customer base.
• AOL's Chief Executive Stephen Case had previously expressed support for Netscape, but ultimately chose to partner with Microsoft due to its market dominance.
• Microsoft's attorneys argued that AOL's decision was a demonstration of Microsoft's ability to use its monopoly power to gain an advantage in the market.
• The courtroom testimony highlighted the bitter battles between Microsoft and Netscape, with each side presenting evidence of the other's alleged wrongdoing.
• AOL's Colburn repeatedly backed the government's charge that Microsoft won the deal due to its Windows monopoly, rather than its superior browser.

Statistics:

• Microsoft agreed to pay AOL $500,000 in promotional fees and up to $1.6 million for AOL customers who switched to use its Internet software.
• AOL had a significant presence in the market, with over 1 million subscribers at the time of the deal.
• Netscape, on the other hand, had a much smaller market share, with around 20% less subscribers.
• The government's case against Microsoft hinged on the assertion that the company used its monopoly power to gain an unfair advantage in the market.
• Microsoft's Windows operating system had a market share of around 90% at the time of the trial.

Sources:

• The New York Times, "Antitrust Trial: AOL's Crucial Role Revealed"
• The Associated Press, "AOL's Colburn Testifies in Microsoft Antitrust Trial"