Private Suits Begin in Wake of Microsoft Antitrust Trial

AOL Time Warner, Sun Microsystems, and Be—three of the companies that figured prominently in the original phase of the Microsoft antitrust trial—have all brought private suits against the software giant. Microsoft could be liable for billions of dollars of damages if these cases succeed.

AOL Time Warner's suit is based on a ruling in Microsoft's federal antitrust case, in which the court found that the company broke the law in several ways while attempting to wrest control of the browser market from Netscape (now part of AOL Time Warner). AOL Time Warner claims that Microsoft gained control of the Web-browser market almost solely because it bundled Microsoft Internet Explorer (IE) in its best-selling OS. Microsoft then shut out Netscape Navigator through several anticompetitive practices, including threats against PC makers that attempted to include Netscape with their PCs. AOL Time Warner wants Microsoft to end its anticompetitive practices and pay damages. And those damages could be extensive: Under federal law, AOL Time Warner could collect as much as three times the damages that the court finds. The company would also like Microsoft to sell a stripped-down version of Windows that doesn't bundle IE.

Be's suit alleges that Microsoft's illegal business practices destroyed Be's business. Former Apple Computer executive Jean-Louis Gassee, who wanted to develop a powerful multimedia-oriented computer, founded Be in 1990. After several failed strategies, the company began porting its BeOS to PC-like devices and eventually secured a contract with Sony, which last year used the OS in its short-lived eVilla device. When eVilla failed in the market, Palm purchased Be. But the acquisition was apparently more of a maneuver to gain Be's engineering talent than its technology. Palm stated at the time that it had almost no use for the BeOS, elegant and powerful though it was. A statement from Be explains that "The lawsuit alleges, among other claims, that Microsoft harmed Be through a series of illegal exclusionary and anticompetitive acts designed to maintain its monopoly in the Intel-compatible PC operating system market and created exclusive dealing arrangements with PC OEMs prohibiting the sale of PCs with multiple preinstalled operating systems." In other words, Be claims that Microsoft illegally prevented PC makers from bundling BeOS with their systems, thus purposefully wiping out Be's market value—which at one time exceeded $1 billion. Be is asking for triple damages and an unspecified amount of punitive damages.

Sun's suit is similar to the Netscape and Be cases, though Sun's concern, of course, is its Java programming environment and Microsoft's predatory attempts at ending Java's industry support. Sun says its suit is worth more than $1 billion.

AOL Time Warner, Sun, and Be don't need to establish that Microsoft broke the law because the federal court already made that determination in Microsoft's antitrust case. Instead, each of the companies can simply push for remedies that would restore competition in the appropriate markets—and seek monetary damages as well. Will other suits follow? Probably. With Microsoft's guilty verdict as proof, some of Microsoft's competitors might have finally found a way to eat away at Microsoft's market power: through its wallet.

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