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CNN Live At Daybreak

Did Microsoft Emerge Unscathed?

Aired June 29, 2001 - 08:02   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BRIAN NELSON, CNN ANCHOR: Now to even bigger money matters -- slightly, anyway -- the future of Microsoft: As the legal wrangling drags on, what is it going to mean to you?

Well, the company and the Justice Department have three main options right now. They could settle out of court, or the government could take the case back to federal district court with a new judge, or either party could appeal to the Supreme Court.

An appeals court overturned a federal judge's order to break up Microsoft. But the software giant didn't emerge unscathed, as CNN's Bruce Francis now reports.

(BEGIN VIDEOTAPE)

BRUCE FRANCIS, CNN CORRESPONDENT (voice-over): Microsoft avoids the corporate death sentence for now, but many of the key findings against the software giant remain. The appeals court said that Microsoft is a monopoly and that the company illegally tried to protect its position. The appeals court agreed that Microsoft made illegal deals with Apple Computer and Internet service providers, licensing deals with computer manufacturers and certain relationships with independent software developers also broke the law.

JOHN ASHCROFT, ATTORNEY GENERAL: I'm pleased to say that the court unanimously found that Microsoft engaged in unlawful conduct to maintain its dominant position in the computer operating systems. This is a significant victory.

FRANCIS: But the court also singled out a few issues that were clearly victories for Microsoft, namely that evidence did not support the conclusion that the market for browsers was monopolized. Microsoft did not engage in predatory pricing by giving away the browser. And the appeals court disagreed with the claim that Microsoft illegally tied the browser to windows and remanded that claim, or sent it back to a lower court.

The court emphatically agreed with Microsoft that Judge Jackson should have held specific hearings on remedies. And the court found that Jackson's public comments on the case seriously tainted the proceedings.

BILL GATES, CHAIRMAN, MICROSOFT: We feel strongly the cloud of breakup is not over us now because of the reversal that we've got here. And most importantly, we can proceed with the new products that we've been working on.

FRANCIS: Another judge will oversee...

(END VIDEOTAPE)

FRANCIS: Well, that means that Microsoft will finally get what it asked for: its day in court to actually argue against a breakup. But that also means that it may yet find itself faced with that dreaded result. The appeals court did not say that a split-up was out of the question.

But, Brian, today the bar is raised considerably for that.

NELSON: Bruce, a question for you: What relief might the government seek or be satisfied with now that a breakup seems to be partially off the table?

FRANCIS: They'll probably look for some sort of behavioral remedies: changes in the way that Microsoft conducts businesses, the way it signs licenses with various partners, other software companies, computer manufacturers, things like that. That's probably going to be on the settlement table yet if those talks do get started. And the odds are pretty high that they will -- Brian.

NELSON: All right, thanks, Bruce Francis in New York. Thank you.

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