January 22, 2002 6:15 PM PST
Industry says ho-hum to Netscape suit
Apple Computer, Compaq Computer, Hewlett-Packard, Intel and Oracle each declined to comment on the lawsuit, in which Netscape asks for a jury trial and unspecified damages. The suit, filed in U.S. District Court for the District of Columbia, seeks triple damages based on the Clayton Act and the District of Columbia Code, as well as interest and attorneys fees.
Some industry leaders said they had been expecting the lawsuit since November 1999, when U.S. District Judge Thomas Penfield Jackson issued a "findings of fact" that came down harshly against Microsoft's business practices. In April 2000, he concluded that Microsoft was a monopoly that used anti-competitive means to maintain its dominance in Intel-based operating systems. Jackson also determined that Microsoft illegally tied its Internet Explorer Web browser to Windows 95 and Windows 98 to stave off rival browsers.
In June 2001, a panel of seven appellate judges upheld eight separate antitrust violations by Microsoft. In November, Microsoft, nine states and the Department of Justice reached a settlement that is still undergoing review pursuant to the Tunney Act.
A month later, nine other states that didn't join the settlement filed a remedy proposal asking that, among other items, Microsoft be compelled to give away the Internet Explorer source code to restore competition in the browser market.
"Given the revelations of Microsoft's business practices through the court's holdings in the federal antitrust case, this should surprise no one," Red Hat spokeswoman Melissa London said of the newest lawsuit.
The lawsuit by Netscape, which was acquired by AOL in 1999, was so widely expected that even representatives from Sun Microsystems--a company full of rabid Microsoft bashers--did not issue a statement or return calls to comment on the case.
Representatives at ProComp, a Washington-based trade group to "Promote Competition & Innovation in the Digital Age," said they would have been flabbergasted had Netscape not sued. In the mid-1990s, the Netscape browser had a leading position in the market but now is a distant second to Microsoft's Internet Explorer.
"I think AOL probably had an obligation to its shareholders to bring this lawsuit after the Court of Appeals ruling," ProComp President Mike Pettit said of the June appellate court decision. "It's a slam-dunk case that's only about calculating damages that were caused by Microsoft."
Despite being underwhelmed at the filing, Pettit and others said they would keenly watch the jury and judge who ultimately would put a price tag--if any--on Microsoft's actions. Many Silicon Valley executives had considered Netscape as one of the more innovative companies in the tech sector, until Microsoft's rival browser began to eclipse it.
"Imagine what Netscape could have become had Microsoft not acted in an anti-competitive way to harm it," Pettit said. "It literally could have supplanted Microsoft. The damages will surely be in the billions of dollars, and that's before they're trebled."
Mitchell Kertzman, chief executive of interactive TV company Liberate Technologies, said he will also eagerly await a ruling. He's betting Netscape will leave the courtroom with a substantial amount of cash--and a psychological victory over Microsoft.
"As a result of the antitrust trial and ruling, you have to say that Netscape probably has a good chance of winning this," Kertzman said. "My hope is that if they win, it doesn't turn into a case of the rich getting richer and Microsoft just transferring cash...I would hope the remedies would be broader and create more opportunities for other companies that are currently competing with Microsoft."
For many industry observers, the newest lawsuit is proof that Microsoft's battle to shed its monopolist image will be long and difficult.
"The chickens are coming home to roost for Microsoft," said Ed Black, CEO of Washington-based trade group the Computer & Communications Industry Association. "Netscape is the most prominent victim of Microsoft's antitrust violations, but there are hundreds of other companies and millions of consumers that have fallen prey to this conduct. Hopefully, a meaningful remedy can result from AOL's suit...and competition can be restored to this industry."
Although widely anticipated, the lawsuit sparked unexpected reaction from some technology veterans. Eric Raymond, author of the open-source manifesto "The Cathedral and the Bazaar," said he opposes the lawsuit and all suits that arise from antitrust issues. Legal experts said Jackson's 1999 findings of fact would provide the basis of Netscape's case against Microsoft.
"I'm opposed to antitrust law in principle," Raymond said. "Markets solve these problems. The government doesn't. Antitrust law gives governments more power than they should have.
"This puts me in the peculiar position of more or less siding with Microsoft, or at least not against them," Raymond said. "I'm an open-source guy and think the things Microsoft has done are scummy and should make consumers angry and should cause wholesale rejection of Microsoft's products. But I don't think the government has any business meddling in this market or any other."
Raymond added that his small-government stance is not necessarily representative of the relatively diverse open-source community at large.
"There will be a lot of people in the open-source community who will be supportive of it," Raymond said of Tuesday's lawsuit. "I don't think anybody in the open-source community questions whether Microsoft has done bad things and will continue to do so."
News.com's Ian Fried, Richard Shim and Rob Lemos contributed to this report.