Netscape-Microsoft legal feud heats up

Netscape Communications has stepped up its efforts to foment a legal challenge to Microsoft, sending a letter to the Justice Department that accuses Microsoft of anticompetitive behavior in its bid to establish itself as a leader in the Internet market.

In a letter sent to the department on August 12, Netscape's outside counsel Gary Reback alleges that Microsoft is hurting consumer choice in the Internet space by leveraging its vast resources in the desktop PC arena to squeeze other competitors out of the market. The letter points specifically to Microsoft's attempt to gain market share for Internet Explorer through exclusive deals with Internet service providers and hardware OEMs.

Reback's letter is the latest in a series of ever-escalating confrontations between Netscape and the Redmond, Washington, software giant and the most forceful protest so far.

"Microsoft's recent conduct far exceeds any reasonable definition of pro-competitive, welfare-enhancing behavior," the letter states. "In addition to these under-the-table arrangements, Netscape's recent investigation has uncovered numerous additional steps that Microsoft has taken for the purpose of eliminating competition in the Internet software market."

Antitrust attorneys said it was unclear what action the Justice Department would take in the case, if any. "I think it's premature to think that the DOJ is going to haul Microsoft into court to stop this," said Keith Shugarman, an antitrust lawyer at Goddwin, Procter, & Hoar.

The DOJ may be taking another look at Microsoft's activities, though. Tim O'Reilly, president of O'Reilly & Associates, said he was contacted by the Justice Department last week regarding Microsoft. O'Reilly, which makes a Web server for Windows NT, has been a vocal critic of a licensing restriction imposed by Microsoft on Windows NT Workstation 4.0.

Microsoft officials though, were typically nonplussed by the Netscape/Reback letter. "We view these as wild and untrue statements," company spokesman Greg Shaw said, adding that the company has not been contacted by the Justice Department on the matter. "This press release diverts attention away from the progress of Internet Explorer."

Reback addressed the letter to Joel Klein, the department's deputy assistant attorney general of international and policy matters. Reback made the letter public today in response to a recent deal between Microsoft and the Wall Street Journal that gives Explorer users free access to the Journal's Web site.