AOL Gives Internet Explorer Its Blessing
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As a result of Thursday's comprehensive antitrust settlement and technology agreements between Microsoft and AOL Time Warner, Netscape Communication's future looks even dimmer than it once did.
As part of the agreements announced by the two rivals, AOL has agreed to license Microsoft's Internet Explorer (IE) browser. Microsoft also agreed to pay AOL Time Warner $750 million to settle a year-old private antitrust suit lodged by AOL's Netscape unit against Microsoft. Now, AOL has the option of using IE for seven years, royalty free. IE is currently at the heart of the AOL Internet-access platform. AOL had been dabbling with using the Netscape Gecko browser as the core of its future AOL platform releases. But it now sounds as if AOL will be incorporating IE, not anything Netscape-related, into forthcoming AOL platforms. AOL had first considered dropping Internet Explorer in January 2001, after the contract requiring its use expired. Later that year, AOL introduced a version of CompuServe which used an embedded version of the Netscape Gecko browser in lieu of IE. Shortly after that, AOL began testing versions of the flagship AOL client with Netscape's browser embedded. Despite much speculation, however, AOL never publicly released a version of its software with a Netscape browser. When asked if today's deal was the immediate death-knell for the Mountain View, Calif.-based Netscape unit of AOL, Chairman and CEO Richard Parsons responded "not at this point." Parsons also declined to comment on what the estimated 200 to 300 Netscape employees are currently working. Parsons said of Netscape: "We've been looking at ways to maximize value there, but we extended our license with Microsoft (for) IE because it's worked very well and we wanted to have … an environment where it continues to work well." Both AOL and Microsoft's MSN unit are readying major updates to their respective Internet platforms for later this year. (article continued on next page) Rights Management: Another Hot Spot The IE agreement was just one piece of the slew of deals announced by the pair. Other announcements included: Parsons noted during a call with press following the announcement: "AOL Time Warner are content creators. We need a secure platform for music, video, voice in some cases, and text in some cases." Microsoft Chairman Bill Gates called Thursday's announcement the start of "a new phase of the relationship" between Microsoft and AOL Time Warner. Gates said he considered the deal "the most comprehensive media license we've ever done." Parsons emphasized that while the deal "marks a new day," AOL expects to continue to both cooperate and compete with its nemesis. He emphasized that the deal with Microsoft is not an exclusive one and said that AOL will continue to do business with RealNetworks. Parsons said the $750 million payment, which AOL plans to use to help retire some of its debt, settles all outstanding litigation between the two companies. Parsons said talks between the two began in earnest six to eight weeks ago, when Gates called him.
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