- The Washington Times - Wednesday, January 23, 2002

AOL Time Warner Inc. sued Microsoft Corp. yesterday, contending that the software company violated antitrust laws and harmed its once-dominant Internet browser, Netscape Navigator.
The lawsuit mirrored complaints made in the federal government's antitrust case against the Redmond, Wash., computer giant.
A federal appeals court upheld findings in June that Microsoft violated antitrust laws and harmed Netscape, which AOL bought in 1999 for $9.8 billion. Before that decision, U.S. District Judge Thomas Penfield Jackson found that Microsoft tried to make it harder for Netscape to compete with its own Internet Explorer browser.
In a 19-page complaint filed yesterday in U.S. District Court for the District of Columbia, AOL Time Warner charged that Microsoft engaged in a series of harmful acts beginning in 1995 intended to damage Netscape. As a result, Netscape lost browser licensing revenues and lost browser market share that would have led to other revenue, the company said in its lawsuit.
AOL Time Warner did not say yesterday how much money Netscape had lost.
Netscape had a 70 percent share of the market for Internet browsers when it was founded in 1995, according to the lawsuit. It has less than 20 percent of the market for Internet browsers now, and Microsoft's Internet Explorer browser has 80 percent of the market.
Netscape was founded in 1994, which was when it released the first version of its Internet browser, a piece of software allowing computer users to surf the Web.
"Microsoft immediately began taking steps to neutralize Netscape and the threat it posed. Within Microsoft, achieving a higher browser market share for Internet Explorer became 'job 1,'" AOL Time Warner said in its lawsuit.
Microsoft did that when it bundled its browser with its Windows operating system in 1995, according to the lawsuit. The company also forced computer makers to accept exclusionary license restrictions that prohibited them from including Netscape on equipment.
Microsoft criticized AOL Time Warner's decision to file the lawsuit.
"AOL has been using the political and legal system to compete against Microsoft for years," Microsoft spokesman Vivek Varma said.
Critics of the federal government's lawsuit against Microsoft charged that it was driven by complaints from the industry, not consumers.
AOL Time Warner deliberately filed its lawsuit before the conclusion of the lawsuit that began in May 1998, when the federal government, 20 states and the District filed an antitrust lawsuit saying Microsoft abused its market power to thwart competition, an AOL source said.
"We felt it was appropriate to do it now while the court is still dealing with the issue," the source said.
Although the federal government and nine states settled the antitrust lawsuit with Microsoft in November, nine states and the District of Columbia pursued stronger penalties against the software company. A hearing to determine those penalties is scheduled to begin in March.
AOL Time Warner said it supports the pursuit of tougher sanctions by the clutch of state attorneys general. Iowa Attorney General Tom Miller, who spearheaded the group's effort, declined to comment yesterday.
Microsoft countered that the new lawsuit was simply an effort to lengthen its legal battles.
"I think they are attempting to use this filing to undermine the settlement. It's a tactic to interfere with efforts to bring the case to a conclusion. This lawsuit isn't about consumers," Mr. Varma said.
AOL Time Warner is seeking an immediate injunction against Microsoft to prevent what it calls further anti-competitive behavior, the company said.
"Indeed, Microsoft's illegal actions and the harms to Netscape are ongoing," AOL Time Warner General Counsel Randall J. Boe said in a statement.
AOL Time Warner is requesting a jury trial. It is not clear how soon a trial could begin, AOL Time Warner corporate Vice President John Buckley said.
AOL Time Warner also is seeking compensation from Microsoft, and the company is entitled to triple the amount of damages settled upon by the court, according to AOL Time Warner.
AOL Time Warner shares fell $1.18 a share yesterday, or 3.99 percent, closing at $28.40 on the New York Stock Exchange. Microsoft shares fell $1.64 a share, or 2.48 percent, closing at $64.46 a share on the Nasdaq Stock Market.
AOL announced the lawsuit after the markets closed.

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