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Network Connection

By Dr. Philip Baczewski, Associate Director of Academic Computing

End of the Browser Wars?

On Friday, May 30, it was announced that Microsoft and AOL Time Warner had settled the lawsuit filed by AOL's Netscape division. That lawsuit had claimed anticompetitive practices on the part of Microsoft (I know I'm shocked). According to the Mercury News, "AOL had a relatively strong case, legal analysts said. But it also faced anywhere from three to five years of litigation and appeals. At the same time, AOL has been searching for ways to pay down its massive debt left from its blockbuster acquisition of Time Warner in 2000."

This is quite a turnaround considering that in January of 2002, Microsoft denounced AOL as a company that would rather litigate than innovate. It was billed as a clash of the Titans: AOL, the company that could fill your mailbox with free diskettes and CDs, and Microsoft, the company that could shove their inferior 1980s technology (oh, pardon me,
I meant "innovation") down your throat because they could blackmail their OEM dealers into selling nothing else. On the face of it, however, it was a battle of the network browsers. The longtime-dominant Netscape versus the scrappy challenger backed by the unlimited bankroll, Internet Explorer.

The bigger stakes were online services. If Microsoft could make you use its browser, they could snare you onto their online service before you learned there were alternatives. If you had a choice of browser, then you could have a choice of service providers and AOL was in the best position to get you to install their virus, uh, I mean "software." He who controlled the network controlled the content and that was enough to lock the horns of these two mammoth companies. (As it turned out, most people were smarter than MS thought and the Microsoft Network butterfly has remained just another MS bug.)

Reason prevails?

It seems that reason has now prevailed. All it took was a friendly call from Bill Gates of Microsoft to Dick Parsons of AOL Time Warner in which Bill poured enough money ($750M) through the phone line to make a settlement seem like a reasonable course of action. You have to feel a bit sorry for Bill, considering that that only leaves Microsoft sitting on about $46 Billion or so. But, he also sweetened the deal by providing a free 7-year license to Microsoft Internet Explorer and an option to license Microsoft's media and security software when it becomes available.

Wait a minute here. I thought the whole problem was that Microsoft was using its monopolistic position to get people to use Internet Explorer and now part of the settlement is that AOL uses Internet Explorer? Isn't that like suing your doctor for amputating the wrong leg and then settling by letting him cut off your good arm too? Is AOL Time Warner just trying to innovate, or has something else changed over the past year and a half?

Yes, the correct answer is, something has changed. AOLTW is sitting on $24 Billion of debt as a result of its mergers and acquisitions. It seemed like such a good idea at the time -- you take AOL, the leading online service provider and shove it together with Time Warner, the leading content and media provider and, voila! -- instant market channel. Its just too bad that no one at AOL was smart enough to figure out how to make everyone's computer shout, "you've got movie!"

So, AOLTW needs cash, Steve Case is out of the picture, and Microsoft benevolently steps in with a gracious offer to settle the lawsuit. This "kick-them-with-your-gold-toed-boot-while-they're-down" strategy has worked before for Microsoft. Remember Apple's "look and feel" lawsuit against Microsoft claiming that Windows was just an expensive imitation of Mac OS? Well, that was in the days when Apple was having a bit of a cash flow problem itself. Microsoft graciously settled and Apple got $150M and a Mac version of Internet Explorer as well as a Mac version of Microsoft Office written programmers who actually knew the Mac operating system (the funny thing is, in my experience, the Mac OS version works better than the Windows version).

Now AOL Time Warner can go back the business of delivering content ("You've got Magazines!") and not have to worry about having to innovate, but where does that leave Netscape? Should you download version 7 and put it up on your knick-knack shelf next to the final 100 AOL diskettes you received in the mail? I doubt that Netscape will fade
too soon, which is a good thing because it would be difficult to dust up there.

The Browser Business

Technology and technology companies have a way of hanging on and reinventing themselves when the environment changes around them. IBM still makes a ton of money licensing mainframe software, but their TV ads portray them as web service integrators. Sun is still selling its proprietary hardware as the market embraces open software standards to go with an open hardware standard that's been around for years. ("Hey Scott! If the network is the computer, why are you still selling computers?")

The other interesting development is that there seems to be more browser software from which to choose. You've got Netscape's open source counterpart, Mozilla . There's the Konqueror browser which is an outgrowth of the KDE open source desktop environment. Konqueror also serves as the basis of Apples Safari, an OS X native browser which is currently under development and released as beta-test software. Interestingly enough, Microsoft has announced it will stop developing new versions of Internet Explorer citing Safari as competition it can't overcome.

It seems that the marketplace is now free for Microsoft's "innovation" of  the beat-them-down, pay-them-off variety. The marketplace has also decided that it likes a standard Internet which can be accessed by a number of browsers. So, get yourself an HTML rendering engine, slap on some Java and you too can be in the browser business. That is, until someone decides that it's time to "innovate."