AOL Time Warner, which owns Netscape, sued Microsoft today in a federal court for illegally destroying Netscape's share of the browser market. The lawsuit is based on a ruling in Microsoft's wider antitrust case, in which the court found that the software giant broke the law in several ways while attempting to wrest control of the browser market from Netscape. AOL wants to see Microsoft end its anticompetitive practices and pay damages. And those damages could be quite extensive: Under federal law, AOL could collect up to three times the damages the court finds.
"This action is an attempt to get justice in this matter," an AOL representative said yesterday. AOL backs a plan by nine US states that would require Microsoft to sell a stripped-down version of Windows that doesn't bundle Microsoft's Internet Explorer (IE) browser. AOL says that IE gained control of the Web-browser market almost solely because it was bundled in Microsoft's best-selling OS. Microsoft then shut Netscape out of the market using several anti-competitive practices.
AOL doesn't need to establish that Microsoft broke the law, because the court already made that determination in the antitrust case. Instead, AOL can push for remedies that would restore competition in the browser market and hit Microsoft where it hurts--in the wallet.
In related news, AOL Time Warner issued a statement late yesterday in which it denounced a Washington Post report that it was in talks with Linux-maker Red Hat Software. "The Washington Post story is incorrect," an AOL spokesperson said. "AOL is not in negotiations with Red Hat."