Judge Thomas Penfield Jackson, in a bombshell ruling,
said the deal announced late last month was a "very
significant change," in the high-tech industry that could
have far-reaching implications on the government's
case against Microsoft.

Jackson made his comments as he granted a motion
filed by Microsoft lawyers to obtain documents
relating to the three-way transaction that also includes
Sun Microsystems that are now in the hands of the
Justice Department.'s antitrust division.

"We are all aware that there has been what might be a
very significant change in the playing field as far as the
industry is concerned," Jackson told lawyers.

"In order for the AOL and Netscape merger to be
brought to fruition, government approval is required. It
seems the Department of Justice would be in
possession of the operative documents and that
Microsoft may have a right to review the terms,"
Jackson said.

"It could very well have an immediate effect on the
market and the definition of that market," Jackson
added. Market definition is the core of any antitrust
case.

The judge's comments were clearly good news for the
embattled Microsoft legal team that has been taking a
beating uring the nine weeks of the landmark trial.

When the deal was first announced Microsoft lawyers
called on the government to drop the case.

Last night, as the case recessed for two weeks,
Microsoft officials repeated their claims that the
AOL-Netscape deal proves the competitive
landscape of the high tech industry is capable of rapid
changes - far outpacing the government's ability to
regulate it.

"This is what we've said all along," said company
spokesman Adam Sohn. "Everything can change
overnight and the industry is really five steps ahead of
the government."

"Potentially, this is damaging to the government's
case," said William Kovachic, an antitrust scholar at
George Washington University. "The judge is picking
up on the company's theme that technological
dynamism cures all ills, and he also is clearly looking at
the question of whether there's a monopoly at all,"
Kovachic said.

David Boies, the Justice Department's lawyer in the
case, said he would turn over documents collected
during the government review of the
AOL-Netscape-Sun alliance.

The AOL-Netscape deal is not the only seismic shift in
the industry since the trial began.

Earlier this week Sun Microsystems and the Oracle
Corp. announced plans to create a new business
computer that doesn't require operating system
software - a move aimed at the heart of Microsoft's
Windows colossus.

Legal experts have said the AOL-Netscape deal
would have little impact on the government's
presentation of evidence that Microsoft acted illegally
to bully competitors and partners and squelch
competition in order to protect its Windows
monopoly.

The impact may come at the end of the trial, when the
government asks the judge for remedies to curb
Microsoft's behavior.

-- Niles Lathem - 12/17/98