06/01/19 ONLINE ORIGINAL: A TALK WITH NETSCAPE'S ROBERTA KATZ

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A TALK WITH NETSCAPE'S ROBERTA KATZ

Roberta Katz is senior vice-president and general counsel for Netscape Communications Corp. A former cultural anthropologist before becoming a lawyer, Katz joined Netscape in 1995. While she welcomes the Justice Dept.'s actions, she says the browser is just the first battleground. She spoke to Business Week's Robert D. Hof about the Microsoft antitrust suit filed by the Justice Dept.
Q: Are the Department of Justice's demands and remedies reasonable -- or sufficient?
A: I don't think they would have brought this case if they didn't think they had good evidence to substantiate their complaint. They know what their case is.
Everybody's been viewing this as Netscape vs. Microsoft. It is not Netscape vs. Microsoft. This is the government vs. Microsoft, based on allegations that the law has been violated by Microsoft. They have found the violations of law in the context of an investigation into the browser market. That's why Netscape's mentioned a lot.
Q: Well, not the only reason. Netscape is the only other significant browser company.
A: Microsoft has tried to spin this as "Oh, this is really just Netscape in another commercial ploy here." It kind of hides the ball. What's really going on is the governments are saying Microsoft has violated the law -- serious law. Basic antitrust laws are essential if the market is going to work, and if people start screwing around with that, that's serious, and the governments are stepping in. This is serious for consumers, for hardware makers, and for software developers.
Q: So you think this case will have an impact beyond browsers?
A: Exactly. It was deceptive when Microsoft kept saying, "This is about Netscape, this is about Netscape." The complaint is about Microsoft's violations of the law.
Q: But this did come about from Netscape's complaints.
A: And others. We complained, and the reason you knew we complained is that when we first complained, we told the world we were complaining. We told Microsoft we were complaining, to put them on notice that we were aware that we believed they were acting illegally -- to tell Microsoft, we are watching. Didn't seem to slow 'em down.
This industry has suffered in silence for quite a long time. In 1995, with the consent decree, that case started because competitors who were affected by anticompetitive acts complained. But then they didn't let their names be used when it came time to fight about it, because they were so worried about retribution. We said, "Hey, the problem is not going to get fixed if people don't speak up." I know for a fact that lots of other companies have complained. But they don't go out and tell the press the next day.
Q: Has coming out publicly caused problems for Netscape?
A: You can read the complaint, the stuff that's alleged there, and decide if it was made worse because we said we were looking at the issues.
Q: One remedy calls for Microsoft to ship Netscape's browser. Isn't that stretching current antitrust case law?
A: People are focusing on that because Gates has been using this Coke-Pepsi analogy. He's suggesting that both Coke and Pepsi have free access to the grocery store, right? Well, who owns the grocery store in this case, or the computer? Who owns 90% of the grocery stores in the country? So the grocery store owner also produces Coke. If the grocery store owner decides that Pepsi won't be carried, he can stop the market from ever seeing Pepsi. And that's what this complaint is all about -- all the different ways Microsoft as the grocery store owner was stopping every avenue of distribution, of access to the marketplace, that they could.
This case is not about Microsoft as the producer of Internet Explorer. It's about Microsoft as the producer of the operating system. Microsoft is very much hiding the ball.
Q: Still, requiring Microsoft to ship Netscape's browser is an unusual request given existing antitrust law.
A: I'm not an antitrust expert. I have to assume they know what they're doing. If Microsoft owns 90% of the grocery stores, and if a lot of people want Pepsi, how else do people get Pepsi? That's what the antitrust laws are about. It's why monopolists are subject to special rules.
Q: Since you started offering your browser for free, PC makers have been free to include it regardless of what Microsoft offers, haven't they?
A: Assuming no illegal pressure. If you read the complaint, the government, having talked to computer manufacturers, is not assuming no illegal pressure.
Q: If this injunction is granted, will it actually aid you in competing with Microsoft?
A: It will aid not just us. We don't make revenue off the browser, O.K.? It will aid the consumers, because the browser is an important medium to access the digital marketplace. You don't have just Microsoft or Microsoft's products as the only place from which to access that marketplace. Netscape is one of many beneficiaries.
Q: So your browser would still be free even if it were shipped with Windows?
A: We've given our source code away! But the rest of our business is built on Internet technologies. So we care very much that the Internet stay open.
Q: Does giving PC makers the ability to control the boot-up screen help Netscape as well?
A: Same answer. Anybody who cares about the Internet and the digital marketplace has got to care that there be competitive, alternative routes to get there. And not just when Microsoft says.
If that first screen has Microsoft Travel, Microsoft Banking, Microsoft Sidewalk, Microsoft this, Microsoft that -- which is what they're already producing -- they will automatically get a bunch of people using it, because you can't get off the first screen without clicking on something. If Microsoft forces people to start there, you automatically don't have a level playing field for anybody else. You don't want to have to go through Microsoft as the tollgate. Or the guy who won't even open the gate for you.
If the government doesn't break that chokehold, who does?
Q: Overall, do these actions come soon enough to help Netscape compete and overcome the alleged damage?
A: We don't know what the company would have been if we hadn't been subject to illegal tactics. But we know what the company is today, and we're very excited about these businesses that we're in today. They're directly related to our Internet birth. It's not back to the browser wars.
Q: If the governments prevail, will the balance of power tip back toward Microsoft rivals?
A: I certainly hope so.
Q: Should the suits have been broader?
A: They have been conducting many investigations. Joel Klein said: "We're still investigating other areas."
Q: How will the industry look different if Justice's case prevails?
A: There would be an absolute flowering of new ideas for the Internet. Venture capitalists say they just don't fund things if they think Microsoft is going into that turf, because there's no assurance they'll get their money back.
The beauty of the Internet is that it really can be an open computing environment. I like the analogy to highways. Look at the diversity of cars that all operate just fine on the highway -- colors, options, styles, sizes, age, tires. People could pick and choose among different kinds of products.
Q: And what if Microsoft prevails?
A: Oh, I think it'll be a sad day for everyone. Ultimately, they'll be back at it, but we'll be that much more harmed.

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