Netscape takeover helps Microsoft's case

Microsoft is using America Online's takeover of Netscape to boost its defence against the US Department of Justice (DoJ).

In the ongoing anti-trust battle, Microsoft's lawyers are arguing that the deal "pulls the rug from under the government". They predict that if the $4.2bn merger goes through, it will undermine the DoJ's main allegation that the software giant used illegal business practices to gain a monopoly in the operating system market.

Throughout the trial, Microsoft's legal team has claimed that the fast pace of the IT industry means that winners and losers often change places almost overnight. They say that if Microsoft had a true monopoly and was able to abuse it, then the Netscape deal would not go through.

William Neukom, Microsoft's chief counsel, said: "This proposed deal shows that Microsoft's competitors have always had the ability and the resources to change the landscape - almost overnight."

Some industry observers claim the deal will mean lighter penalties for Microsoft. But Tony Clifford Winters, an independent analyst, disagrees. "Just because two companies can sign a deal doesn't mean that Microsoft had the right to stop it in the first place. The fact that Microsoft thought it had the power to stop it reinforces the US government's case. It has 95 per cent of the PC world and if that is not control then I don't know what is," he said.