A riddle: Why does Netscape still exist?

Netscape actually lost the browser wars a long time ago, in part because of Microsoft's tactics, but also because its product is no longer very good. And no judicial ruling is going to change that.

COMMENTARY--When I heard the news that AOL Time Warner (my employer) filed a lawsuit last Tuesday against Microsoft, I was not surprised -- just disappointed. AOL's civil suit accuses Microsoft of using its Windows software, which has long been bundled in its Internet Explorer browser, to crush Netscape, which has a competing browser and is owned by AOL.

Don't get me wrong. It's not that I think Microsoft is entirely innocent of using its monopoly power to crush Netscape. The facts speak for themselves. Internet Explorer, which was developed after Netscape, now controls more than 80 percent of the market for Internet users, while Netscape is limping along as a minor subsidiary of AOL. Netscape actually lost the browser wars a long time ago, in part because of Microsoft's tactics but also because its product is no longer very good -- and no judicial ruling is going to change that. Even AOL realizes this, since it bundles Internet Explorer instead of Netscape with its own PC software.

Netscape's browser used to be light and zippy, but now it's heavy and sluggish. The current version on my computer, Netscape 6.2e (an enterprise version not markedly different than the consumer one), takes up five times as much memory as Internet Explorer does. Hell, it even takes up more memory than my operating system. Needless to say, it also crashes frequently. Netscape is so bad that I would no longer use it, except that as an AOL employee, I'm forced to. The company recently switched its corporate e-mail to Netscape Mail, which can be used only with the Netscape browser.

(Incidentally, don't even get me started on the wonders of Netscape Mail. Suffice it to say that its primitive features and extremely buggy nature make it seem like a throwback to e-mail systems circa 1995.)

No, there's no question that Microsoft crushed Netscape. The real question raised by the suit is not whether the Justice Department's proposed settlement with Microsoft is too lenient -- as AOL's jumping into the litigation at this time would suggest -- but rather, Why does Netscape even exist anymore?

As a stand-alone entity, Netscape has little value to AOL. Its iPlanet partnership with Sun Microsystems, for instance, is being disbanded -- Sun will offer that enterprise software on its own. Of course, the Netscape website continues to generate a lot of traffic for AOL, and there's probably some value left in the brand. And those things are likely good enough for AOL to keep it around, along with whatever software developers remain. But it seems that the most important thing ownership of Netscape allows AOL to do is sue Microsoft.

AOL obviously does not like the direction that the government's antitrust settlement is heading and wants Microsoft to be punished more severely for its perceived sins. This concern that Microsoft might emerge virtually unscathed from its antitrust battles with the Justice Department is not new. Last summer AOL refused to release Microsoft from future litigation, one of the main factors that scuttled their negotiations to include an AOL icon in the current version of Microsoft's operating system, Windows XP. It seems that for AOL, keeping a potential lawsuit in its back pocket was more important than detente.

And after its experience watching Netscape users drift off to a Microsoft product that had been bundled into Windows, AOL now would be right to fear that there's more to come. Microsoft's new XP operating system includes instant messaging software and the Windows media player, and is optimized for a slew of planned .Net services that rely on Microsoft's Passport identification scheme. (Passport keeps track of Web users and can speed online shopping and other Internet transactions.) A sentence in AOL's lawsuit claims that Microsoft's "harms to Netscape are ongoing," which suggests that AOL would like to broaden the scope of the proceedings, perhaps to try to quash some of these newer features.

In fact, the suit looks a lot like a monkey wrench thrown into the gears to try to slow Microsoft down. After all, the company is a bigger threat to AOL today than it has ever been. Last quarter was the first time that its Internet access service added more subscribers in the United States than AOL's did. And its Passport and .Net initiatives hint at a brewing battle for control over consumers' digital identities in the years to come. So, in a way, it's not surprising that AOL would try to use every tactic at its disposal in an attempt to ward off the inevitable. Unfortunately, shareholders and employees alike had better hope that the company has better tricks up its sleeve than this.

If nothing else, AOL's suit only serves as an ugly reminder of the $10 billion it poured down the drain when it bought Netscape back in 1999. To me it's just sad that Netscape, once so proud and seemingly destined for greatness, has been reduced to nothing more than a whipping post for AOL's lawyers.

As an editor at large for Business 2.0, Erick Schonfeld contributes to the editorial development of the magazine, writes feature stories, and pens a weekly online column (Future Boy). Schonfeld is also a contributing editor for Fortune, where he has written about technology and investing for the past seven years.


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