Microsoft & .NET.NETNetscape Files Suit Against Microsoft for Antitrust Violations

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DULLES, VA, January 22, 2002 — Netscape Communications Corp. today announced it has filed suit in the United States Federal District Court in the District of Columbia against Microsoft Corp. to seek redress for Microsoft’s anticompetitive conduct against Netscape, a subsidiary of America Online. This anticompetitive conduct also formed the basis of the U.S. government’s antitrust case against Microsoft. A Federal District Court concluded on June 7, 2000, and the Court of Appeals unanimously affirmed on June 28th, 2001, that Microsoft’s behavior violated antitrust laws and had harmed Netscape.

The seven-count lawsuit alleges that, beginning in 1995, Microsoft harmed Netscape in a series of illegal acts aimed at promoting Microsoft’s Internet Explorer browser at the expense of Netscape Navigator, the Web browser many credit with having been the catalyst for consumer adoption of the Internet. The suit seeks injunctive relief sufficient to prevent further antitrust injury to Netscape and an award of treble damages to be determined at trial.

America Online acquired Netscape Communications in 1999.

“Netscape’s lawsuit is a logical extension of the findings entered by the District Court and unanimously affirmed by the Court of Appeals that Microsoft thwarted competition, violated the antitrust laws and illegally preserved its monopoly at Netscape’s expense,” said Randall J. Boe, General Counsel to America Online. “There is no question that Microsoft’s conduct violated the law and harmed competition and consumers. Netscape’s lawsuit seeks not only an award of damages but for the Court to provide injunctive relief that will help restore competition on the computer desktop. We support the efforts and goals of the non-settling state attorneys general, who continue to seek appropriate remedies to end Microsoft’s anticompetitive conduct and illegal activities. The aims of Netscape’s lawsuit are entirely consistent with their efforts.”

Netscape’s claims against Microsoft draw substantial support from the unanimous ruling of the Court of Appeals. In affirming that Microsoft had violated Section 2 of the Sherman Act, the Court of Appeals stated that “Microsoft undertook a number of anticompetitive actions that seriously reduced the distribution of Navigator.” The Court of Appeals further stated these actions “have a significant effect in preserving [Microsoft’s] monopoly; they help keep usage of Navigator below the critical level necessary for Navigator or any other rival to pose a real threat to Microsoft’s monopoly.”

The lawsuit alleges that Microsoft’s illegal actions “resulted in harm to competition and antitrust injury to Netscape in particular. Netscape was seriously damaged by Microsoft’s illegal conduct in at least the following ways: it lost browser licensing revenues; it lost browser market share that would have led to other significant sources of revenues, including portal revenues and revenues from its enterprise software and products businesses; its marketing and distribution costs were significantly increased; it lost goodwill and going concern value; and it lost the profits that would have existed if Microsoft had not acted illegally to prevent Netscape’s browser technology from providing a competitive alternative to Microsoft’s monopoly operating system as a development platform.”

The lawsuit “seeks to recover all the damages to Netscape, trebled in accordance with the law. Netscape also seeks equitable relief to eliminate the continuing effects of Microsoft’s illegal conduct and to restore competition lost in the operating system market and in the Web browser market because of Microsoft’s illegal conduct. Indeed, Microsoft’s illegal actions and the harms to Netscape are ongoing.”

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