Netscape feared MS would kill merger

Netscape so feared Microsoft's power over the software industry that it thought Microsoft could kill its merger with America Online Inc., Netscape Chief Financial Officer Peter Currie said Wednesday morning.

Currie, who appeared before attorneys from both sides in the ongoing Microsoft antitrust trial, said, "We did wonder if AOL, by acquiring Netscape, would secure the animus of Microsoft ...if AOL got weak-kneed or cold feet, the deal could vanish."

Microsoft attorney Michael Lacovara got little more than that during more than 2 1/2 hours of back and forth with Currie. Lacovara apparently hoped to show that Netscape and AOL thought their proposed merger would reinvigorate the company his client is accused of trying to exterminate.

Lacovara presented Currie with several sets of documents produced or written by Netscape investment banker Morgan Stanley Co. between September and November of last year. Those documents suggested the deal was an "industry-defining" merger for Internet services.

Though bankers apparently prepared the materials for Netscape board meetings in September and November, neither bankers nor board members discussed the impact of the merger on the larger markets, Currie said. Rather, he told attorneys, the company focused on the effects the merger would have on Netscape itself.

Lacovara suggested several times that Netscape had told the Department of Justice the deal was underway as early as last September. That was two months before the deal's public announcement in late November. When pressed, however, Lacovara would not claim his allegation was fact.

Government officials said they knew nothing before November. Lacovara "wouldn't say why he had a basis for saying that," DOJ's lead attorney David Boies said. In fact, Boies claimed, Justice and the states found out about the deal only "a day or two" before its public announcement.

During Wednesday morning's session, Currie told Lacovara that marketplace changes had caused his company to shift investment away from building browsers into producing software for large corporations. Netscape officials say they have in effect been driven from the market for end-user browsers entirely.

After the deposition was over, Boies said the testimony had yielded essentially nothing for Microsoft.

Lacovara said only that he had real reason for saying the Justice Department knew about the merger in September. "I'd not have asked the question unless I had a good-faith belief it was true."

Take me to the DoJ/Microsoft page.

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