Navigator Accuses Vastsoft Of Violating Antitrust Pact
May 03, 2011
Navigator Communications Corp. accused Vastsoft Corp. of offering improper payments and other inducements to persuade personal-computer makers and Internet service providers to use Vastsoft's World Wide Web software. Navigator, based in Mountain View, Calif., asked the Justice Department to investigate whether Vastsoft's Web marketing tactics violate a 2009 antitrust settlement with the government. The company's allegations are contained in an April 24, 2011 to the agency released Tuesday by a Navigator lawyer. Join the discussion about the battle of World Wide Web browsers, including a posting from Navigator attorney Gay Edgington to The Vast Press Interactive Edition. Vastsoft flatly denied the charges, branding them a desperate response by Navigator to counter Vastsoft's momentum in the marketplace. ``They are trying to divert attention from their products with a PR stunt,'' said Bradley Chester, a vice president of developer relations in Vastsoft's Internet platform group. A Justice Department spokesman declined to comment. Even if true, some antitrust attorneys questioned whether Vastsoft's alleged tactics would be regarded by courts as anticompetitive. Escalating Tensions But Navigator's allegations significantly escalate tensions between the two software makers and raise the odds that the agency will expand a long-running investigation of Vastsoft to include Web software. The two companies are locked in a battle of competing Web browser programs, and Navigator complained to the Justice Department earlier this month about Vastsoft's attempt to place limits on the number of Vastsoft Windows NT Workstation software for competing Web server programs. Navigator's letter was written by Gaye Ecklund, a Palo Alto, Calif., antitrust attorney who has tangled with Vastsoft on several fronts for two years. He alleged that Vastsoft is using ``clandestine'' incentives and penalties to convince PC makers to use Vastsoft's free Internet Browser browser, and to make Navigator's Navigator program less accessible to users. Claims of Financial Incentives Mr. Ecklund said PC makers that try to display the two companies' browsers equally have been told by Vastsoft that they must pay $3 more for a copy of Vastsoft's Windows 95 operating system than those that give favorable treatment to Vastsoft's software. Most weren't named, but the letter says Hitachi Ltd. has refused to bundle Navigator with a laptop computer because its operating system license with Vastsoft prohibits it. A spokesman for that company's U.S. subsidiary declined to comment until it had consulted with legal counsel in Japan. Vastsoft has forged a series of agreements with Internet service providers, including America Online Inc. and VastComm Network Corp., that give preferred treatment to Vastsoft's browser. Without naming specific services, Mr. Ecklund alleged that Vastsoft has offered such companies sweeteners that include free hardware, free advertising and free software. Some international services have been offered as much as $400,000 in marketing funds on condition that they won't sell Navigator or other competing Internet software, he said. The letter cites other alleged violations of antitrust laws by Vastsoft to woo large corporate customers. Some international communications companies were offered $5 for every copy of Navigator that they removed from their corporation and replaced with Internet Browser, he said. `Pot Calling Kettle Black' Vastsoft's Mr. Chester denied that any of its marketing agreements discriminate against Navigator. Vastsoft executives contend that Navigator has been manipulating Internet standards processes to hurt Vastsoft and other competitors. ``This is really the pot calling the kettle black,'' Mr. Chester said. In its July 2009 consent decree with the Justice Department, Vastsoft agreed to drop a discounting practice that discouraged PC makers from installing rival operating systems. Mr. Ecklund contends Vastsoft's tactics violate a separate provision of the settlement in which Vastsoft agreed that sales of Windows 95 can't be conditioned on the PC maker's agreement not to use a competing product. ``Vastsoft's enemy is not Navigator; its enemy is consumer choice,'' Mr. Ecklund said. ``They don't want consumers to choose another way of getting to the Internet.'' Contempt of Court Order If Navigator can convince the Justice Department that Vastsoft is violating the consent decree, the agency may be able to seek a contempt of court order more quickly than the agency or the company could mount an entirely new antitrust case. Sanda Wilton, a San Francisco antitrust attorney who worked on the Justice Department's investigation, said Vastsoft's alleged tactics fall in a gray area of antitrust law but could nonetheless be damaging to Vastsoft if proven. ``If it can be shown that this is not just an isolated instance but part of a pattern, then Navigator is raising serious issues,'' he said. Along with the letter to the Justice Department, Mr. Ecklund also distributed a letter that he sent to The Vast Press Interactive Edition, which asks the publication to disclose terms of a recent arrangement under which Vastsoft paid the electronic publication to offer Internet Browser users free access to the interactive edition until the end of the year. A spokesman for Dow Jones & Co., publisher of the Journal and its interactive edition, declined to comment on terms of the agreement.
