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Technology Stocks : America On-Line (AOL) -- Ignore unavailable to you. Want to Upgrade?

To: Roy F who wrote (19795)	6/3/1999 11:39:00 AM
From: Tunica Albuginea	Read Replies (1) \| Respond to of 41369

Roy Fortier, from Wall St Jour today:AOL v.MSFT DJ Microsoft Turns Attack On AOL/Netscape Merger By MARK BOSLET This story was originally published Wednesday. WASHINGTON -- Executives from America Online Inc. (AOL) and Sun Microsystems Inc. (SUNW) discussed building an AOL-based personal computer several months before AOL agreed to tie the merger knot with Netscape Communications Corp. AOL also lusted after a "lite" package of applications software - including a word processor and spreadsheet - that didn't rely on Microsoft Corp.'s (MSFT) popular Windows-based Office suite, according to internal documents from the two companies. Similarly, investment bankers at Goldman Sachs & Co., who advised AOL in its $10.2 billion Netscape acquisition, described Netscape's browser as the basis for a "more comprehensive desktop application," according to a Goldman Sachs presentation. The application would have the potential to become a "user's de facto environment," again supplanting Microsoft's Windows, the printed fairness-opinion presentation said. Microsoft attorneys introduced Wednesday afternoon almost a dozen internal Sun and AOL e-mail messages, and the Goldman Sachs presentation, as their antitrust defense turned to the offense. Most of the documents remain under seal and weren't discussed in court. But with the several that were openly excerpted, they asserted that AOL's purchase of Netscape, and its companion technology development agreement with Sun, presented Microsoft with a broad front of new competition. "Is it a threat? Yes," Microsoft attorney Michael Lacovara said outside of federal district court. "Is it real? Yes. It leaves Microsoft very, very scared." The Microsoft claim was the centerpiece of an afternoon cross examination of government witness Franklin Fisher, a Massachusetts Institute of Technology economist, who said he was unaware of AOL's plans. AOL's Chief Executive Steve Case, during a deposition late last month, denied that AOL was developing a special Web-based computer, or other products, to compete with Microsoft. Nevertheless, with the e-mail documents, Microsoft hopes to show that the government's broad antitrust case against it is unnecessary. Competition in the computer software industry remains fierce and is not in need of government regulation, the company has said repeatedly. In an antitrust case filed in May 1998, the Department of Justice and 19 states charge Microsoft with using its Windows monopoly to crush browser rival Netscape. Judge Is Skeptical Of New Documents In one July 1998 internal Sun e-mail, Sun executives review a recent meeting with America Online and plans for an AOL personal computer using Intel Corp. (INTC) chips, Java but "no Microsoft content," the document states. According to the Goldman Sachs presentation, Netscape would offer AOL a "viable alternative to Microsoft as a browser provider." AOL presently uses Microsoft's Explorer in its online service and has extended its contract to do so to January 2001. Microsoft attorney Lacovara said the documents illustrate how the AOL merger raises the level of competition in the browser market. However, his claims met with skepticism from Judge Thomas Penfield Jackson, who said the disjointed, "ambiguous," "cryptic" and now outdated documents did little by themselves to paint a convincing picture. They were written last fall, or earlier, and it isn't clear whether they represent current thinking or "wishful thinking" on the part of AOL, Jackson said. Lacovara said he would bring them up again when AOL Vice President David Colburn takes the stand later this month. So far, government attorneys have acknowledged that the merger presents Microsoft with a larger, more powerful competitor in the online marketplace, but not in the software market, where Netscape had been beaten down by its larger rival. They added Wednesday that even if there is increased competition in the browser market, it has little bearing on the case, which is about Microsoft using its dominance in the operating-systems business. -By Mark Boslet; 202-962-9285