NETSCAPE vs. MICROSOFT

The media played up the lawsuit Netscape filed against Microsoft a couple of days ago. The allegation is that Microsoft damaged Netscape by preventing the Netscape browser from competing fairly in the marketplace. Presumably the damages are the lost profits from the Netscape browser. I was amused by the assumption that Netscape will be awarded hundreds of millions of dollars (or billions, in some news reports) for its lost profits.

Who knows? Maybe that will come true. But think about three things while you read the stories.

– During the time Netscape and Internet Explorer were competing, can you recall any advertising by Netscape whatsoever? A magazine ad? A radio ad? A catchy jingle? A CD that arrived in the mail? You’re drawing a blank, aren’t you? There was nothing. Nada. Zilch. At the time, Microsoft was blitzing every conceivable medium with nonstop advertising for Internet Explorer. Judge Jackson concluded that Microsoft did bad acts and interfered with Netscape’s ability to compete. Netscape can rely on those findings. But to recover vast amounts of lost profits, Netscape will have to demonstrate that Microsoft’s bad acts were the only reason that the Netscape browser failed in the market – and I just don’t see it.

– During the time Netscape and Internet Explorer were competing, the Netscape browser was given away for free. Internet Explorer continues to be given away for free. The Netscape browser continues to be given away for free. Profits? What profits? In the law biz, lost profits are unavailable if they are “speculative.” Netscape’s lost profits are best suited to fiction writers.

– America Online’s software is built on a heavily customized Internet browser. A few years ago, AOL signed a deal with Microsoft to use Internet Explorer as the technology powering AOL’s software. Every copy of AOL’s software includes a copy of Internet Explorer.

The contract with Microsoft expired more than a year ago. Before the contract expired, AOL acquired Netscape. But AOL has done nothing to change its software. Every month, AOL distributes Microsoft Internet Explorer as part of its AOL software.

How can Netscape contend that it has a solid product which could have succeeded on its merits? Its owner doesn’t trust it enough to use it! AOL could have put Netscape technology in the hands of 33 million AOL subscribers by this time.

You know why? Shh – don’t tell anybody, this is the secret part that won’t be reported. It’s because Netscape makes a crappy Internet browser. It’s full of bugs and AOL has to distribute something that’s relatively troublefree or its support costs will go out of sight and its subscribers will bail out.