AOL, Netscape Tie the Knot

Gentlemen, we have a deal. AOL and Netscape announced Tuesday morning that their anticipated marriage would go ahead -- after a full month of secret negotiations -- and that AOL would pay $4.21 billion. That's $210 million more than expected -- which, considering Netscape's dire financial straits, is no small potatoes. Netscape shareholders get a healthy 0.45 AOL shares per Netscape share. The company's CEO, Jim Barksdale, gets a seat on AOL's board. And with Sun Microsystems helping out on the server software front, cyberspace has a coalition large enough to contain the mighty Microsoft.

This win-win deal has something for Bill Gates, too. In Washington's federal courthouse, lawyers for Microsoft have jumped at the chance to prove that it's a volatile world after all. How can you have antitrust regulation when that kind of conniving is going on? "This proposed deal pulls the rug out from under the government," said top Redmond attorney William Neukom.

Tell that to Frederick Warren-Boulton, a leading economist and current Justice Department witness. Warren-Boulton offered what may well become the feds' counter-spin: That Microsoft's exclusive contracts and illegal monopoly leverage drove its bruised browser rivals into the arms of AOL. Meanwhile, a more cultural argument was being made on bulletin boards across the Internet -- that the mainstream will always appropriate successful companies that operate on the fringe. "The battle is over," wrote one AOL-phile. "AOL wins."