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Morning News

Final Microsoft Antitrust Ruling Expected Today

Aired June 7, 2000 - 10:00 a.m. ET

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

BILL HEMMER, CNN ANCHOR: In five hours time, a federal judge set to hand down a ruling that may split Microsoft into two separate companies. It is the latest ripple of an antitrust case that loomed over the Microsoft empire for years. Microsoft founder Bill Gates had been in Washington, there to testify on the high-tech industry. But this morning, he is now rushing back to the company's headquarters in Redmond, Washington -- Washington State, that is.

The role of Microsoft in the computer boom is undeniable. It shaped the industry and helped created the ripple that reached into millions of homes. So what would a breakup mean to you?

CNN's Don Knapp now with a look behind the legalities in this case.

(BEGIN VIDEOTAPE)

DON KNAPP, CNN CORRESPONDENT (voice-over): Only about one U.S. home in seven had a computer in 1990, the year the Federal Trade Commission opened an investigation into Microsoft's business practices. Windows 3.0 had just begun to take off. By 1997, when the Justice Department took over the investigation, four out of 10 homes had computers, the overwhelming majority using Microsoft Windows.

By then, the Internet had exploded and the fight was over Web browser. Netscape complained Microsoft unfairly incorporated its browser, Internet Explorer, into its dominant Windows operating system.

Today, with computers in one of every two households, and 80 percent of them, running Microsoft Windows, a federal judge stands ready to break the company up. Earlier, Judge Thomas Penfield Jackson found that Microsoft used monopoly power to thwart competition, dominate the market and harm consumers.

DAN WALL, ATTORNEY: The whole theory of the breakup proposal is that the relationship between the Windows operating system part of Microsoft and the applications part of Microsoft keep -- creates a barrier to entry that makes it impossible for anybody to take on Windows.

KNAPP: Microsoft Chairman Bill Gates claims consumers benefit from what he calls a symbiotic relationship between Microsoft software development and his company's Windows operating system. Even before Judge Jackson's decision on a penalty for Microsoft, investors have turned away from the company.

JOHN GARTNER, "WIRED NEWS": You can see from the time of Jackson's ruling in November of '99 through this year that Microsoft's stock has lost considerable value, has moved down from $110 per share to now $60 per share as the potential reality of a breakup now looms.

KNAPP (on camera): If, as expected, Judge Jackson does order Microsoft broken up, the company says it will go to the U.S. Court of Appeals, a court where Microsoft had some luck two years ago. After the judge blocked Microsoft from shipping its Web browser with its operating system, the appeals court overruled the judge, allowing Microsoft to integrate its browser with Windows 98.

Don Knapp, CNN, San Francisco.

(END VIDEOTAPE)

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