AOL - Netscape merger gets green light

America Online (AOL) has been given the go-ahead to buy Netscape. The US Department of Justice (DoJ) announced late Friday night that the deal does not infringe on US anti-trust laws.

A strategic alliance between AOL and Sun Microsystems is a major part of the merger, and many had feared this would give AOL too much power in the marketplace. But the DoJ concluded after a four month inquiry that "neither the merger nor the alliance violate the anti-trust laws".

The value of the acquisition has soared to $9 billion - from only $4.2bn when it was first announced in November 1998 - mainly thanks to the rise in AOL's share price during that time. The acquisition takes the form of a 0.45:1 stock swap of AOL and Netscape shares.

Analysts welcomed the DoJ's decision, not least for its impact on Microsoft. Tony Clifford-Winters, business development manager at Millennial III, told Silicon.com: "This will legitimise Java as a standard language for use on the Internet. It's something everyone has been waiting for - including Microsoft."

Clifford-Winters added that while the move presents a threat to Microsoft, the software giant will use it to prove that there is still intense competition in the market.

According to a report in Wired today, the Microsoft case could be concluded this week.