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Government Rejects Microsoft's Settlement Offer; Judge to Decide on Fate of Software-Maker

Aired March 27, 2000 - 8:24 p.m. ET

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

STUART VARNEY, CNN ANCHOR: Shares of Microsoft down 7 1/2 points today, the most active stock on Wall Street with over 55 million shares changing hands. The reason? Government lawyers who poured over Microsoft's latest settlement offer over the weekend apparently not impressed.

While Microsoft's offer acknowledged it must change, those changes were not enough. That means, barring any last-minute agreement, Judge Thomas Penfield Jackson could rule in a matter of hours.

Once a decision is reached, the big question is how will the consumers be affected.

CNN's technology correspondent Rick Lockridge has more on that.

(BEGIN VIDEOTAPE)

RICK LOCKRIDGE, CNN CORRESPONDENT (voice-over): Remember the Microsoft trial?

GLENN MANISHIN, ATTORNEY: It has been a long, long saga.

LOCKRIDGE: A saga to decide whether Microsoft illegally squelched competition in the computing world. Since a federal judge ruled in November that Microsoft behaves like a monopoly, the company and prosecutors have been working toward a settlement, so far without success.

But when this case finally does come to an end, will Microsoft still be dominant? Or will people be communicating with e-mail watches and wearable computers instead of PCs?

MANISHIN: Even though technology changes, there is very little likelihood that it will undermine Microsoft's monopoly power.

LOCKRIDGE: That's because Microsoft's reach already goes well beyond Windows to online services, hardware and video games. Which is why attorney Glenn Manishin says one of the judge's options, a government-ordered breakup of the software giant, would benefit consumers.

MANISHIN: If the government is able to nip Microsoft's monopoly power, to constrain it and stop it, we'll see a birth of new competition in ways that we can't even fathom yet.

LOCKRIDGE: Not so, says Microsoft. Throughout the trial, the company's lawyers claimed meddling with Microsoft would harm consumers by stifling innovation.

No matter the outcome, those who covered the proceedings say the trial provided plenty of lessons.

DECLAN MCCULLAGH, CORRESPONDENT, "WIRED.COM": One big effect of this case is that it shows companies what not to do in a lawsuit. Microsoft made a lot of errors, like keeping e-mail around.

LOCKRIDGE: And McCullagh says other technology giants should take heed.

MCCULLAGH: Intel has already been the target of a U.S. government antitrust investigation. Cisco and eBay are talked about as well. So look out other companies, the Department of Justice is on a roll.

LOCKRIDGE: But with control of 95 percent of the desktop computers in the world, the roll that Microsoft has been on may be hard to stop.

Rick Lockridge, CNN.

(END VIDEOTAPE)

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