Netscape's folly

The loser in the browser wars has filed a private antitrust suit against Microsoft. But the company doesn't deserve to win.

Editor's note: First of a two-part series on the legal battle between Netscape and Microsoft. Read Part 2.

By Megan McArdle

March 14, 2002 | Like many other technology professionals, I've followed the Microsoft antitrust saga the way some people follow soaps. So when the Supreme Court refused to hear the case, I confess I was secretly a little disappointed. The Court left us with an appellate court ruling that, well, just lacked drama. The ruling split the difference between Microsoft's allegations of innocence and Judge Jackson's sweeping, "Hang the swine from the yardarms!" district court decision.

Microsoft, the appellate court declared, is a monopoly engaging in anti-competitive practices, but that doesn't make its every strategic move illegal; nor did the court call for the corporate equivalent of capital punishment. With this, the court handed the case back to the lower court with some no-nonsense instructions to find a less radical solution.

Show's over; Microsoft will live. Everybody go back to arguing about sports.

Legal observers, however, were not fooled: the antitrust case might be over, but the door was wide open for civil suits. Sure enough, Netscape soon stepped through with a civil filing claiming treble damages -- and I happily anticipated at least a few more years of wrangling over technical and economic arcana.

Alas, the complaint offers little in the way of argument. Instead, Netscape tries to play on our natural sympathy for a scrappy little company that's been bullied to death. The lawyers can't let more than a few paragraphs pass without reminding us that in 1995, Netscape had 70 percent of the market for Web browsers. This fact is reiterated in an indignant tone, as if that share is no more than Netscape's right.

In other words, Netscape isn't mad that there's a monopoly dominating the market for Web browsers; the company's mad because that monopoly isn't Netscape.

Of course, you'd be mad, too. Battling Microsoft in the software market is like trying to beat the house at blackjack: The game's rigged against you from the start. The tactics used to keep Netscape off the desktop would have made protection racketeers blush. If Microsoft couldn't intimidate customers into signing exclusive agreements with its control of the vital Windows software, it made them sweetheart offers they couldn't refuse. The complaint leaves no doubt that Microsoft acted in many ways, most of them illegal, to prevent third-party vendors from installing Netscape.

But there it rests. Netscape has proved that Microsoft engaged in anti-competitive behavior; it's proven that during this time its own market share dropped faster than Milli Vanilli's. Presumably the lawyers are hoping we won't notice that they haven't proved the one thing they need to: that the dirty tricks caused the collapse.

It's tempting to go along; after all, the tricks were dreadfully dirty. But correlation is not causation, as any first-year statistics student will tell you. To believe that those shenanigans are the source of Netscape's troubles, you need to make two giant assumptions: First, that the mere placement of an icon on a desktop -- or its absence -- can win or lose a market. And second, that Internet Explorer was inherently inferior to Netscape. Neither of these assumptions holds water.

Next page: Microsoft would have won the browser wars, even without being a bully