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Netscape says MS plays dirty

Netscape Communications has charged Microsoft with antitrust violations in the software market.

The rivalry between Netscape Communications and Microsoft has flared up into a war of words, with Netscape officials accusing Microsoft of stifling competition in the market for Web servers.

In the past weeks, lawyers for both companies have exchanged heated letters over a Microsoft decision to limit the use of its Windows NT 4.0 Workstation software as a platform for Web servers. But, that's not the only issue that Netscape might try to use against Microsoft. Netscape's lawyer, Gary Reback, is investigating whether or not other antitrust complaints could be lodged against Microsoft.

"Over the next couple of weeks I'm going to turn over a whole mess of stones and see what crawls out," Reback said .

A well-known antitrust lawyer with Wilson, Sonsini, Goodrich, & Rosati, Reback has already designated himself Microsoft's nemesis by leading a successful fight against Microsoft's acquisition of Intuit on antitrust grounds.

Reback suggested that he would continue to scrutinize Microsoft's Internet deals for anticompetitive moves, including recent pacts that bundle access software for national Internet service providers such as America Online and Netcom directly into Windows 95 in exchange for the ISPs naming Internet Explorer as their default Web browser.

The first battle, however, comes over Microsoft's decision to limit the number of Internet users that can connect to its Windows NT Workstation operating system.

Yesterday, Reback sent Microsoft, as well as officials at the U.S. Department of Justice, a letter accusing the Redmond, Washington software company of deliberately preventing companies from using NT Workstation to run Web server applications such as Netscape's own FastTrack Web server.

Gina Talamona, a spokeswoman for Department declined to say whether the department's antitrust division had received Netscape's request for an inquiry. "We have had an ongoing investigation into the software industry," she said.

The accusation is that companies can no longer use NT Workstation, a less expensive version of the operating system, to run Web server applications because only ten users at a time can connect to the operating system. Instead, they have to use the pricier NT Server. Windows NT 4.0 Workstation costs $319; Windows NT 4.0 Server costs $1,129. Yesterday's letter from Reback was sent in response to a July 30 demand from Microsoft lawyers that Netscape stop comparing the price of its FastTrack server, which runs on NT Workstation, with Microsoft's Internet Information Server, which runs only on NT Server. FastTrack also runs on NT Server.

Microsoft argues that NT Workstation is not appropriate for running servers and that users who want to set up Web sites should buy the more robust NT Server, which happens to come bundled with Internet Information Server.

"All we're saying is you shouldn't be using Workstation as a server," said Enzo Schiano, product manager for Windows NT Server. "Beyond six connections, performance starts suffering."

Netscape officials give Web server performance on NT Workstation more credit though. "The FastTrack Server works fine on Windows NT 3.5.1," said Mike Homer, vice president of marketing for Netscape. "The vast majority of our NT Web servers are running on NT Workstation." Homer estimates that more than 70 percent of Netscape's NT Web servers--which include the $295 FastTrack and the higher-end $995 Enterprise Server--are being run on NT Workstation.

Microsoft doesn't really think NT Workstation is completely useless as a Web server platform either, since the company bundles a "light" version of IIS called Peer Web Services with NT Workstation. Netscape and other companies that make Workstation Web servers, such as O'Reilly and Associates, agree and have railed against the ten-user limit in Workstation.

Tim O'Reilly, president of O'Reilly and Associates, made the issue public for the first time last month when he openly complained about the ten-user limitation built into the latest upgrade of NT Workstation. On July 19, Microsoft partially backed down, replacing an artificial technical limitation with a licensing limitation so that users could physically hook up more than ten users but only by breaking their licensing agreement.

O'Reilly has maintained that NT Workstation works fine as an Web server platform and that the Microsoft licensing limit is a clear move to force people onto the more expensive NT Server. It was at this point that Netscape entered the fray.

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