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Netscape knocks Microsoft
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August 20, 1996: 9:05 p.m. ET
Firm alleges Microsoft violated 1994 Justice Department consent decree
From Correspondent Steve Young
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NEW YORK (CNNfn) -- The war between Netscape Communications Corp. and Microsoft Corp. intensified Tuesday.
CNNfn has learned that Netscape has written the U.S. Justice Department for a second time this month, accusing Microsoft of illegal conduct and saying the company violated its 1994 antitrust consent degree reached with the government.
The consent degree mandates that Microsoft not use its dominance in the operating-system market to hinder consumer choice.
Microsoft, whose operating systems are on 80 percent of personal computers, declined to comment.
In Netscape's latest letter, the company charged that Microsoft:
- made PC manufacturers pay $3 extra for each personal computer using Windows 95 if they wanted both Microsoft's Internet Explorer and Netscape Navigator included. Netscape estimates Microsoft sold 40 million copies of Windows 95 in the product's first year, meaning that manufacturers paid an extra $120 million.
- offered corporate customers free operating-system upgrades and consulting. Also, Microsoft allegedly paid international telecommunications customers $5 for every Netscape Navigator browser that they dropped and replaced with Internet Explorer.
- offered to buy out contracts that large Internet service providers have with Netscape. Microsoft also allegedly offered $400,000 if the providers promised not to sell Netscape or other Internet software.
Rick Sherland, a tech analyst with Goldman Sachs, said "Microsoft and Netscape have a very intense rivalry" and that Microsoft is a "very intense competitor." But he deferred judgment on Microsoft's tactics to the attorneys. (194K WAV) or (194K AIFF)
In its latest letter to the Justice Department, Netscape said Microsoft has "resorted to a wide variety of predatory pricing and bundling behavior that violates the antitrust laws."
Netscape asked the Justice Department to take immediate action on its complaints. The company also offered to supply witnesses who will back up its accusations against Microsoft.
Netscape further said the Federal Trade Commission has expressed interest in handling the case if the Justice Department is too thinly staffed to take on the issue.
Late Tuesday Brad Chase, Microsoft senior vice president in charge of Internet Platforms, called to Netscape's charges "wild and untrue."
But Chase specifically denied only one of Netscape's points of contention -- that Microsoft charges an additional $5 for its Windows 95 to PC manufacturers who install Netscape's browser on their machines.
As is its tradition, the Justice Department would not confirm that it had received Netscape's complaint letter. 
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