AOL/Netscape Behind Attack on Microsoft

(Washington, D.C.) - Citizens Against Government Waste (CAGW) today slammed the decision by AOL Time Warner to sue Microsoft over Netscape's loss of competitive edge and shrinking market share.  The suit reveals what critics of the Department of Justice's original antitrust lawsuit have said all along: that Microsoft's competitors were pushing the litigation to undermine their competitor in court instead of in the marketplace.

“AOL Time Warner is simply riding on the backs of the federal and state governments, who have collectively spent more than $35 million since the beginning of the antitrust suit against Microsoft in 1996,” CAGW President Tom Schatz said. “AOL has gone from being a dynamic new-economy corporation to one dependent upon litigation to meet its goals.  The company has been going downhill ever since the AOL Time Warner merger, and its shares have fallen to a 52-week low.  This lawsuit will not regain market share, but it will continue to cost tax dollars by tying up the federal courts.”

Schatz noted, “The remedy sought by AOL-Time Warner and Netscape is remarkably similar to that being sought by the nine remaining states plus the District of Columbia in the ongoing government suit against Microsoft.  The one major difference is that AOL Time Warner, which paid $10 billion for Netscape, is asking for some $12 billion for Netscape's supposed ‘injuries.’  While other companies simply accept their inevitable decline due to a lack of business acumen, AOL has chosen to blame Microsoft for Netscape's woes and win in court what it can't win in the marketplace.  This is in stark contrast to Kmart, which is trying to rebuild its market share without running to court and suing Target and Wal-Mart."

CAGW recently sent Freedom of Information Act requests to the remaining states in the government’s case against Microsoft, with no response to date.  The cost to taxpayers is still unknown in states such as California, which never even replied to CAGW's 1999 FOIA request.  States are continuing to drag out this matter, which brings uncertainty to the marketplace in uncertain economic times.  They have even issued subpoenas to organizations such as CAGW, seeking thousands of pages of information, although it is difficult to see how that material would affect the already radical remedy being proposed by these states.

“Instead of continuing to waste tax dollars on this lawsuit, states should be focused on reducing excess to make up for shortfalls caused by the economic recession, and focus resources on homeland security and other far more significant priorities.  Likewise, AOL Time Warner would be well-advised to save the taxpayers money and allow the federal courts to also spend their resources on more important litigation, such as trying terrorists,”  Schatz concluded.

Citizens Against Government Waste is the nation's largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.