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Everybody v. Microsoft
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January 25, 2002: 4:26 p.m. ET
First it was the federal government, then the states -- and now AOL wants a piece of Bill Gates. Can't everybody just get along?
By Adam Lashinsky
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SAN FRANCISCO (CNN/Money) - Think of AOL Time Warner's private lawsuit against Microsoft as the business-world counterpart to the civil suit filed against O.J. Simpson. In that sordid affair, a criminal court let the ex-football star off the hook, so the aggrieved families sued for money (they got $33.5 million).
In the case of Netscape vs. Microsoft, Microsoft appears mighty close to getting off with a wrist-slapping on antitrust charges, so AOL -- parent of Netscape and this website -- is after money instead, perhaps billions of dollars.
Whether AOL can succeed seems beside the point. It will take years of mind-numbing litigation to see this one through. The better question is, "What does AOL have to gain from antagonizing its arch-rival, sometime-partner and frequent customer?"
To review, AOL's Netscape unit on Wednesday filed suit against Microsoft, asking to be repaid for damages suffered in the famous browser wars. By bundling Internet Explorer as part of Windows, argues Netscape, Microsoft used its monopoly position in software operating systems to try and put Netscape out of business.
Federal courts essentially agreed with that assertion, but the "remedy" -- breaking up Microsoft -- has been overturned by a settlement between the Bush administration and Microsoft. Several state attorneys general continue to fight that battle, with AOL's assistance. Now comes this private suit to keep the legal fires stoked indefinitely.
For years, Microsoft and AOL have worked together well, if not amiably. AOL struck exclusive deals with Microsoft to distribute its online service to PC buyers. Microsoft avoided direct confrontations at least while its landmark antitrust case proceeded.
That period is over. AOL sees Microsoft as the biggest threat to AOL's total media domination. Both are in Internet access. Both are in cable. Both want to sell subscriptions over the Web. In short, Microsoft stands between AOL and its customers' living rooms.
"If anything, this 'co-opetition' they've had over these past few years has cooled," argues Brian Oakes, a long-time Wall Street analyst and AOL watcher now in semi-retirement. "They were kind of under this Cold War truce, but now they realize they're just not friends."
But don't these two see that the Cold War was a money-draining preoccupation for both sides? And can't AOL see that the more powerful empire ultimately won that battle easily (and, at least in this columnist's view, Microsoft has a quite a bit more muscle right now)?
Sure, AOL stands to benefit if it recoups billions from Microsoft. And yes, AOL should let Microsoft know it will vigorously oppose the software giant's incursions onto its turf, like online access and cable television. But doesn't it strike anyone else as bad business to sue simply because you can, to re-fight essentially settled issues just as a way of antagonizing your enemy? (How would AOL respond if Microsoft, a prodigious advertiser in consumer and business publications, pulled its ads from Time Inc. magazines, like Fortune and People, just to be petty?)
This battle of the titans is better fought in the marketplace than in court.
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