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Rev. January 22, 2001
The Browser Wars, 1994-1998
Netscape exploded onto the scene in December 1994 with the release of Navigator, its flagship browser for the World Wide Web. In less than two months, Navigator grabbed more than half of the browser market, and Netscape itself became synonymous with the Web. Analysts began to tout the young company as a worthy successor to Microsoft at the center of the software world, but Microsoft refused to be counted out of the game. On Pearl Harbor Day 1995, the software giant launched an aggressive campaign to defeat its latest rival. (See Exhibit 1.) By mid-1998, observers were wondering how long Netscape, which had lost 35 points of browser market share, would survive. (See Exhibit 2.) America Online (AOL) put an end to these speculations by agreeing to acquire Netscape near the end of the year. However, plenty of questions remained for Steve Case, the chairman and CEO of AOL. Facing growing competition from Microsoft to become the leading destination on the Web, should AOL reignite the browser wars, or should it continue to promote Microsoft's browser, as it had done for more than two years? At the same time, Bill Gates, the chairman and CEO of Microsof t, pondered a dilemma of his own: Should Microsoft continue to press for victory on the Internet, or should the company, which was fighting Federal and state antitrust suits, take a more accommodating line?
Netscape was founded in April 1994 as Mosaic Communications Corp.1 Mosaic was the name of the browser that transformed the Internet from an academic tool into a mass medium. (See Appendix for background on the Internet and related technologies.) Mosaic's "button"-based interface made it easy to navigate the World Wide Web, and its graphical features made it fun. Following the browser' s release in February 1993, the Web exploded virtually overnight. In...