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Microsoft Decision Reversed

Aired June 28, 2001 - 15:00   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.
LOU WATERS: I'm Lou Waters at the CNN center. We have a major story developing today. It began this morning when a federal court of appeals unanimously reversed the breakup of Microsoft, ruling that the software giant violated antitrust laws, but that the trial judge engaged in -- quote -- "serious judicial misconduct" by make derogatory comments about the company.

Since that time, Jim Colinin, a spokesman for Microsoft, issued this statement to CNNFN: "We are pleased that the court has overturned the bulk of the lower court's ruling, and today's ruling significantly narrows the case and removes the breakup cloud from the company. We are very pleased that this ruling reverses the district court's decision on technology-tying, which was the core issue in this case, and the court of appeals provides a very positive framework should these issues have to be retried."

Now, the court of appeals, in addition to what I have just told you -- this is the court of appeals for the District of Columbia circuit, ordered that a new judge decide what penalty the company should face. It also struck down and altered some of the lower court's findings of antitrust violations at Microsoft.

Now the big question remains: What about the Bush administration? How will it react? How will it proceed in connection with the Microsoft case, which is not over yet? We have CNN's justice correspondent Kelli Arena with us.

Give us some bullet points here, Kelli. What has happened today and what are we expecting to hear from Ashcroft?

KELLI ARENA, CNN CORRESPONDENT: Well, Lou, we are expecting to hear from the attorney general. He was scheduled for a press conference right at the top of the hour. That has been delayed somewhat. But we should also hear from the assistant U.S. attorney in charge of antitrust, it's a man named Charles James.

So far, Lou, the Justice Department has adopted very much a wait- and-see attitude toward the Microsoft case. It has said all along that it would wait for this appeals court ruling before deciding its strategy. When the appeals court ruling was issued earlier today, the Justice Department issued a very brief statement, in part, reading: "We are reviewing the court's opinion and considering our options."

When Charles James, who now heads up antitrust, replacing Joel Klein who very aggressively went after Microsoft, when he was asked during his confirmation hearings what his strategy might be if the appeals court did overrule the lower court decision, all he had to offer was this quote: "We will look as closely as possible to preserving victories and rectifying defeats, if we can." So there really has not been a lot of light shed on this issue, at least from Justice itself.

Now, several industry analysts have all along predicted that if the Bush administration were in power, as it is, when this appeals court ruling came down, and if that ruling was reversed, that this Justice Department just might pursue a settlement. It is viewed as a pro-business administration. That, of course, is the view on Wall Street, so thoughts are that a settlement may be pursued, although this is not what Justice has said in any way. It has not given us any indication. Again, we should hear straight from the horse's mouth very soon, Lou, on that issue.

WATERS: In addition to the Microsoft statement, we're expecting John Ashcroft. They told us earlier today that he is going to -- we don't know exactly what he's going to do, do we? It's about gun control and background checks and the government's position...

ARENA: That's right, Lou. The Justice Department again, keeping mum on that issue as well, although sources have told CNN that the crux of that announcement will have to do with how long the FBI is able to retain records on people who purchase guns. Right now the Justice Department adheres to a 180-day policy, which means that if you go to purchase a gun, the FBI will maintain those records that were done in an instant background check for 180 days. The FBI has contended that that period of time has allowed it to uncover fraud and abuse in the system.

There have been calls from the National Rifle Association, for example, to totally eliminate any record keeping, charging that it's an invasion of privacy. We are expecting that the Justice Department, at least according to sources, will shorten that -- the amount of time that those records are retained, although we do not have any specifics at all from justice officials on that matter.

But this is important, because it's the first concrete step that this Justice Department has taken on the issue of gun control under the leadership of Attorney General John Ashcroft. So there is a lot of trepidation on both sides of the aisle here as to exactly what he will do -- Lou?

WATERS: So we have the general outline. The attorney general of the United States about to make some statements on Microsoft and gun control background checks. We'll take a break. There's been a slight delay. John Ashcroft will step out. We'll be covering it live. We'll take a break and be right back.

(COMMERCIAL BREAK)

WATERS: And we have an unexplained delay in the John Ashcroft news conference, which we expect to get under way at any time, on Microsoft and background checks on guns. While we wait, let's check in with "TALKBACK LIVE."

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