Microsoft warns Netscape in prelude to the ‘browser war’ of 1995-98

Before they were locked in a death struggle known as the “browser war,” the software giant Microsoft and Web upstart Netscape made nice, at least for a while.

Representatives of the two companies met on cordial terms in 1995. Microsoft expressed interest in investing in Netscape and had even congratulated the upstart on developing an immensely popular graphical browser to access the World Wide Web.

The pretense of cordiality dissipated on June 21, 1995, at a four-hour meeting at Netscape headquarters in Mountain View, California, at which representatives of Microsoft delivered what Netscape considered a heavy-handed threat: Divide the market for Web browsers or face the prospect of annihilation.

According to detailed notes of the meeting made by Marc Andreessen, Netscape’s co-founder, Microsoft’s representatives proposed restricting the Netscape Navigator browser to older versions of Microsoft’s Windows operating systems. That would mean excluding Navigator from Windows 95, the upgraded operating system that Microsoft preparing to release.

In notes of the meeting he typed into a laptop computer, Andreessen wrote: “THREAT THAT MS [Microsoft] WILL OWN THE WIN95 CLIENT [browser] MARKET AND THAT NETSCAPE SHOULD STAY AWAY.”

Andreessen, who was not quite 24-years-old at the time, likened the conduct of Microsoft’s representatives to “a visit by Don Corleone” of The Godfather films.

“I expected to find a bloody computer monitor in my bed the next day,” he later said.

Netscape’s CEO, the gentlemanly James Barksdale, recalled the session with Microsoft a few years later, saying:

“I have never been in a meeting in my 35-year business career in which a competitor had so blatantly implied that we would either stop competing with it or the competitor would kill us. In all my years in business, I have never heard nor experienced such an explicit proposal to divide markets.”

Microsoft disputed such accounts and said its representatives had made no attempt to intimidate Netscape.

In any event, Netscape refused the proposed deal and in August, Microsoft introduced version 1.0 of its Web browser, Internet Explorer. By year’s end 1995, a full-blown browser war between the two companies was underway.

It was a war Netscape lost; in 1999 the once-swaggering Web upstart was acquired and absorbed by AOL.com.

The Microsoft-Netscape meeting 20 years ago was a linchpin for the antitrust lawsuit the federal government brought against Microsoft in 1998. Twenty state governments joined the lawsuit which accused Microsoft of engaging in a variety of anticompetitive practices, including having sought to carve up the Web browser market.

The lawsuit further accused Microsoft of pursuing a strategy to crush Netscape by, among other moves, bundling Internet Explorer into its Windows operating system and strong-arming Internet providers and computer manufacturers to favor Internet Explorer over Netscape Navigator.

The government case against Microsoft was extensive, and buttressed by an internal memorandum written in May 1995 by the company’s chairman, Bill Gates. The memorandum, titled “The Internet Tidal Wave” and addressed to senior Microsoft officials, described Netscape as a threat and said, “We have to match and beat their offerings ….”

Microsoft, the government said, “set out to eliminate this competitive threat and to win at any cost.”

The federal judge who heard the case, Thomas Penfield Jackson, decided for the government, finding that Microsoft had “attempted to monopolize the Web browser market.” He ordered the company split in two — a ruling overturned on appeal.

In 2001, the government reached a settlement with Microsoft that was criticized as akin to a wrist-slap: The company was not broken up.

As I note in my latest book, 1995: The Year the Future Began, the outcome of the antitrust case against Microsoft came far too late to help Netscape. By then, I write, the California startup that had so vividly reflected the panache and appeal of the early Web had been reduced “to a forlorn and mostly forgotten outpost of AOL.”

WJC

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