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AOL to keep Netscape browser wrapped

America Online unwraps a $4.2 billion buyout of Netscape, but it plans to leave the company's pioneering Web browser software in the box unopened.

America Online unwrapped a $4.2 billion buyout of Netscape today, but it plans to leave the company's pioneering Web browser software in the box unopened.

America Online today confirmed reports that despite its planned acquisition of Netscape Communications and that firm's Communicator Web browsing suite, it will continue to offer Microsoft's Internet Explorer to AOL's 14 million users.

"Our present intention is to keep using IE, because it is important to keep AOL bundled on the Windows desktop," said AOL chairman and chief executive Steve Case in a conference call.

The decision not to offer AOL users Netscape's browser underscores AOL's chief interest in the other parts of Netscape's business, both in Web portal and enterprise software. But it also brings up important matters related to both the technology of the major browsers and the government's antitrust case against Microsoft.

Communicator's development and distribution efforts are likely to remain relatively unchanged, according to executives. AOL will continue to promote the Netscape browser through Netscape's Netcenter portal site. Netscape's organization--responsible for shepherding the worldwide community development effort of Communicator's open source code--will continue operating as it does today, the executives added.

AOL will continue to support innovations in the Communicator suite, which includes the Navigator browser, that tie the client to Netscape's Netcenter portal.

When it comes to browsers for non-PCs, however, the deal will have a significant impact. In cooperation with Sun Microsystems, the companies intend to speed the development and deployment of new devices for Internet access--which most likely will include a Java-based set-top box to compete with Microsoft's WebTV.

The deal between Microsoft and AOL--under which AOL uses IE for its Web browser and Microsoft bundles AOL software--has been a key piece of evidence in the government's antitrust case against Microsoft. Microsoft contends that AOL's motivation in the deal is the "technological superiority" of Internet Explorer, and not the necessity of being bundled with Windows.

Microsoft today reiterated that argument and questioned Case's justification for keeping IE. Even without any deal with Microsoft, AOL would remain on the vast majority of desktops, because it negotiates that placement with PC makers directly, the software giant argues.

The deal between the two companies provides for AOL's inclusion in the Windows online services folder; but placement of the AOL icon on the Windows desktop is not Microsoft's decision.

"As part of their direct relationship with OEMs, they have an incredible reach," said Microsoft spokesperson Adam Sohn, citing AOL desktop icon guarantees with Compaq, Hewlett-Packard, Packard Bell-NEC, Acer, and IBM. Sohn said that at the time the deal was signed, AOL already had 90 percent desktop distribution on consumer PCs.

"The truth of the matter is that Netscape doesn't have the technology right now to integrate with AOL," Sohn said.

Netscape concedes that with its current 4.x browsers, integration with AOL would be difficult. But with the recently announced "Next Generation" technology, integration with AOL will be a simpler matter. So-called NG technology is more modular in structure, allowing developers to combine parts of it with AOL's and other companies' code, rather than having to code an entire hybrid browser from the ground up.

Once Communicator's technology is more conducive to integration, AOL may make Navigator the default browser.

AOL's deal with Microsoft to use IE and to include AOL software with Windows runs out in mid-2001. AOL can opt out of the agreement as early as the end of next month; Microsoft does not have that option unless AOL decides to pull out.

In one small boost for Communicator, AOL said today that it will take advantage of another acquisition, ICQ, in order to promote the use of the Communicator Web browsing suite.