My weekend National Post
Tick, tick, tick. That is the doomsday clock ticking down on the remaining
days until AOL shutters (or sells) its Netscape unit. It is about time.
AOL Time-Warner and Microsoft
settled their lawsuit last week, and the agreement amounts to a death sentence
for Netscape, the former Internet browser kingpin. While that wasn’t the avowed
purpose of the deal, the result will be no different than if it
To much huzzahs from anti-Microsoft
sorts, Netscape, a division of AOL Time-Warner, brought suit against Microsoft
is January 2002. It was more than a little mischievous. The action came shortly
after Microsoft had already reached an agreement on antitrust issues with the
Department of Justice and nine states.
The suit alleged that Microsoft had
competed unfairly in the Internet browser market. The company had, the suit
argued, tied its Internet Explorer browser to the operating system
unnecessarily, prevent other browser makers from competing. It had also, the
suit said, cut deals with software developers, hardware manufacturers, and
Internet service providers (ISPs) that made it almost impossible for those
companies to support other browsers.
If the court found in its favor,
Netscape had some Christmas wishes it wanted fulfilled. It wanted “injunctive
relief” to prevent Microsoft from damaging Netscape further, as well as having
the courts restore competition lost in the market for Web browsers. It also
wanted to have the courts to enable “middleware platforms” to complete with
AOL Time-Warner got none of these
things. There is no browser market, and so nothing is being restored as part of
the agreement. There once might have been a browser market, but Netscape ruined
it more than Microsoft, first by setting a precedent that browsers should be
free, and then by getting delusions of grandeur and effectively driving other
companies to Microsoft in the mid-1990s.
Some, however, are arguing that the
$750-million payment from Microsoft to AOL Time-Warner is a win for Netscape.
Consider, however, what AOL Time-Warner paid for Netscape back in 1999. The
deal, originally announced at $4.2-billion, ballooned to almost $8-billion in
stock by the time it was completed.
If this payment constitutes defeat,
Microsoft would happily be defeated more often in future. After all, fear of
Microsoft made AOL pay billions for a defunct Netscape, partly in hopes it could
resuscitate the doomed company, but more to use the company as a legal stalking
horse. But for its $8-billion investment, AOL received $750-million. That is a
lousy rate of return in any economy.
There were bennies in the deal, of
course. For example, as if the world needs a few more solar masses of AOL disks
floating around, Microsoft has agreed to distribute AOL disks in certain
circumstances. The two companies have also agreed to work toward bridging their
disparate instant message networks. Given, however, that they have agreed to do
that at least once before and very little has happened, there is little reason
to expect that this agreement is much more than an attempt to increase the word
Perhaps the only other meaningful
nugget is that the two companies have agreed to worth together to combat digital
piracy. While it is a bigger topic than I have space for today, that is
potentially troubling news. Not because I am somehow a fan of the electronic
black market being perpetrated by so-called file-sharing networks, but more
because having software companies police theft is going to rapidly become
intrusive militia justice.
Nevertheless, this spells the end
for Netscape, whatever it means for our ability to police our own homes and
computers. There is no a longer a reason for Netscape to exist, with its market
share dwindled to nothing, and with it not fitting into AOL Time-Warner’s plans
to refocus on media properties and their distribution.
And while no-one has apparently
noticed, the deal is also a strike against the open source software movement.
AOL Time-Warner no longer needs to bankroll Mozilla, the nonsensical browser
promoted by the evangelical fans of collectivist code. Without its support, that
browser will languish, at best, and more likely quickly founder.
Despite all these points in
Microsoft’s favor, none of this is to say that Microsoft did nothing wrong. It
did. The company used unnecessarily aggressive tactics against Netscape, both
rhetorical – “cut off its air supply” – and practical.
The irony, of course, is that
Microsoft could have just stood and watched the car crash. Like so many
Microsoft competitors, Netscape was so blinded by minor successes that it made
bad decisions. Netscape became arrogant early, and errantly promoted a technical
agenda (“Java uber alles!”) over a business and customer one. Without a major
change in tactics, Netscape would have foundered without Microsoft’s
So, some are delighting in the news
that Microsoft is paying $750-million to the company whose air supply it once
allegedly threatened to cut off. But they should stop crowing. Someone just cut
off Netscape’s air supply alright, but it wasn’t Microsoft. It was Netscape’s
owners at AOL Time-Warner.