Microsoft: AOL, Netscape deal undermines DOJ case

Microsoft's top in-house legal advisor says the pending merger deal between Netscape and America Online torpedoes the government's antitrust case. "This proposed deal would be a dramatic change in the competitive landscape. The leading browser company, the dominant online service company and a leading computer company would be joining forces,' says Bill Neukom, head of Microsoft's legal affairs.

Microsoft's top in-house legal advisor says the pending merger deal between Netscape and America Online torpedoes the government's antitrust case.

Netscape and AOL have confirmed they are negotiating. According to numerous press reports over the weekend, Sun Microsystems also is involved in the deal.

“This proposed deal would be a dramatic change in the competitive landscape. The leading browser company, the dominant online service company and a leading computer company would be joining forces," says Bill Neukom, a Microsoft vice president and head of the vendor's legal affairs. Neukom made the statement outside the courthouse here where Judge Thomas Penfield Jackson is hearing the government's case against Microsoft.

"This proposed deal demonstrates a simple truth – there is vigorous competition in the marketplace and Microsoft faces resourceful and creative competitors," Neukom says. "From a legal standpoint this proposed deal pulls the rug out from under the government. In fact the mere possibility of this kind of combination completely undermines the government's case from start to finish.”

Meanwhile, in the courtroom, Microsoft's cross-examination of government expert witness Frederick Warren-Boulton, an economist, is likely continue up to the Thanksgiving break, starting Wednesday. Warren-Boulton argues that Microsoft is a monopoly power -- something the company denies -- and has engaged in practices that impede the commercial opportunities of rivals.

But the pending Netscape-AOL deal shows that Microsoft does not have a stranglehold on the computer industry, Neukom says.

"The government should not be taking sides in such a dynamic and competitive industry," Neukom says. "As this deal shows, the marketplace is always five steps ahead of government intervention."

(Elizabeth Wasserman is Washington bureau chief for The Industry Standard.)

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