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It's The Battle Of The Web Browsers, Redux

Netscape's new antitrust suit against Microsoft reopens a years-old battle over whose software will underpin the Web, and threatens to keep Microsoft executives busy battling charges that looked passé when the company settled its case with the federal government last fall.

At stake, once again, is Microsoft's professed right to integrate into its Windows operating system software for browsing the Web, serving Web pages, playing streaming-media files, and identifying users of online services. Netscape, a unit of AOL Time Warner, on Jan. 22 filed suit in Washington asking for monetary damages and injunctive relief to "help restore competition to the computer desktop," according to an AOL lawyer.

The lawsuit stems from an escalating rivalry between the companies, whose products overlap little today but could compete more directly. Microsoft's ability to leverage Windows to gain traction in new markets threatens AOL's plans to sell interactive services. AOL's ownership of high-speed cable lines could potentially check Microsoft's ability to distribute its software over the Internet. The companies clashed last summer, when talks about bundling AOL software with Windows XP collapsed after AOL objected to Microsoft's bundling strategy.

Netscape, whose Web-browsing software helped launch the Internet boom in the mid-'90s, claims its decline was the result of illegal behavior by Microsoft. Microsoft's decision to bundle its Internet Explorer browser with Windows 95 displaced Navigator's dominance. Today, more than 90% of computer users run Internet Explorer, analysts say.

Netscape is seeking damages that could total billions of dollars, and perhaps versions of Windows that exclude add-on software. Netscape's complaints about Microsoft's anticompetitive behavior helped set in motion the landmark 1998 lawsuit filed by the U.S. Department of Justice and 20 states. Nine states still oppose Microsoft's settlement with the Bush administration.

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