AOL Time Warner sues Microsoft

Media giant AOL Time Warner has filed a civil suit against software giant Microsoft seeking damages for anti-competitive behaviour.

AOL said that Microsoft used its market dominance to undermine AOL's Netscape internet browser, which was once common on desktops until Microsoft began giving its own browser away for free.

This action is an attempt to get justice

AOL chief John Buckley

The lawsuit is based on court findings that Microsoft used its domination of the market in operating systems to restrict competition.

Analysts said AOL's legal bill might run into tens of millions of dollars, and might reach $100m, if it chose to pursue the case to the end through the courts.

Last November, Microsoft reached an out-of-court settlement with the US Justice Department and nine states in a long-running antitrust case.

Nine other states that were part of the action refused to accept the settlement, holding out for tougher penalties.

Immediate injunction

"This action is an attempt to get justice," AOL chief executive John Buckley said.

AOL Time Warner said its Netscape Navigator browser suffered harm through Microsoft's unfair promotion of its own browser, Internet Explorer.

Netscape's share of the internet browser market has declined sharply since the mid-1990s.

We've consistently tried to work more closely with [Netscape], and they've consistently turned us down

Jim Desler, Microsoft

The firm asked the court for damages and to impose an immediate injunction against Microsoft to prevent "ongoing and further damage" to its product.

"Netscape's lawsuit is a logical extension of the findings... that Microsoft thwarted competition, violated the antitrust laws and illegally preserved its monopoly at Netscape's expense," AOL lawyer Randall Boe said.

Microsoft spokesman Jim Desler said the lawsuit was a "disappointment".

"Microsoft is disappointed that AOL has chosen litigation," he said.

"We've consistently tried to work more closely with them, and they've consistently turned us down."

Netscape, which was bought by AOL Time Warner in 1999, filed the suit in the US District Court in Washington DC.

Precedent

Last summer, a panel of seven appeal judges upheld the finding of eight separate antitrust violations by Microsoft.

The appeals court said Microsoft's actions had "helped keep usage of Navigator below the critical level" for any successful challenge to Internet Explorer's market dominance.

However the original remedies, which included splitting the company, were rejected.

The court criticised the judge in the original trial, appointed a fresh judge and recommended new remedies be found.

Penalties

The settlement agreed in November fell far short of the original penalties but imposed a panel of monitors on Microsoft.

Microsoft agreed to release technical specifications which would enable other software developers to build programmes that could interact with its operating system.

That deal, agreed last November, was praised by attorney general John Ashcroft as bringing a fair end to the three year case.

Some commentators viewed the November breakthrough as reflecting the desire of President George W Bush's administration, on the verge of war in Afghanistan, to shed burdensome distractions.

Netscape's share of the internet browser market is less than 20% compared with more than 70% in 1995, analysts said.