Microsoft on Trial: DoJ case opens window for Gates' rivals

Maria Seminerio ZDNet.co.uk

Published: 20 Nov 1998 11:12 GMT

It's a long way from over, but the impact of Microsoft's brutal antitrust trial may already be reverberating through the marketplace, with experts pointing to renewed talks between America Online and Netscape Communications. as one of the first concrete signs.

The Wall Street Journal reported Wednesday that AOL (NYSE:AOL) is talking to Netscape (Nasdaq:NSCP) about making Netscape's Navigator Web browser the default browser for AOL's 14 million users, instead of Microsoft's Internet Explorer. Netscape's stock was up $2 (£1.2) or 5.4 percent, to $41.25 (£25) at midday Thursday.

The current deal under which Microsoft's (Nasdaq:MSFT) browser is AOL's default expires Jan. 1. And while both Netscape and AOL officials refused to comment on the possible deal, the news isn't generating much surprise. "I think the antitrust trial has emboldened Microsoft's competition to think about other strategies," said William Kovacic, a visiting professor at the George Washington University Law School. "Regardless of the result that the government gets, this gives [Netscape] some breathing room."

Not only are pundits predicting that the U.S. Department of Justice has gained the upper hand in its ongoing antitrust case against Microsoft, but this week a federal judge in a separate case ordered the software giant to stop selling software that includes its proprietary version of the Java technology within 90 days.

These developments have opened windows of opportunity for Microsoft's competitors, experts said.

The AOL deal with Netscape, assuming it comes to pass, "is directly related to the DoJ case," said Rob Enderle, an analyst with Giga Information Group. "Without the DoJ case, I don't think this would have been possible."

Microsoft's dealings with AOL became a focus of the government's case during the trial's second week. While Microsoft's problems, perceived or actual, are undoubtedly good news for Netscape, "there's no guarantee they will use this opportunity wisely," Kovacic said.

But the deal with AOL, beyond giving Netscape the bragging rights to the users of the world's largest online service, would also give Netscape a powerful new platform for future versions of its portal Web site, Netcenter, said John Chapman, legal counsel to the Computer and Communications Industry Association trade group. The deal would also give AOL another advantage against Microsoft as it consolidates its portal efforts under the Microsoft Network (MSN) site, Chapman said.