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NEWSROOM for June 29, 2001

Aired June 29, 2001 - 04:30   ET


ANNOUNCER: Seen in classrooms the world over, this is CNN NEWSROOM.

RUDI BAKHTIAR, CO-HOST: Hello and welcome to CNN NEWSROOM for Friday, June 29. I'm Rudi Bakhtiar.

Well, Microsoft and Milosevic top "Today's News." Here's a look at the lineup.

A Microsoft ruling is in, will the company be broken up? Find out in "Today's Top Story." We still have computers on the brain in "Edit Desk," this time we're on the trail of cybercriminals. Up next, we check on preservation efforts in Africa. Finally, our Jason Bellini takes us to Skrappy's.

A federal appeals court overturns a District Court's decision to breakup Microsoft. The United State Court of Appeals in Washington said Thursday that Judge Thomas Penfield Jackson made several errors when he heard the case. The court said the errors made the ruling against Microsoft look biased. The appeals panel did, however, uphold the lower court's ruling that Microsoft engaged in unlawful conduct to dominate the software field. Now it'll be up to another judge to determine what's next for Microsoft. Both sides say they're pleased, but Microsoft Chairman Bill Gates says he's exceptionally hopeful about his company's future.


BILL GATES, CHAIRMAN, MICROSOFT: We've always said that we felt that a breakup was not going to take place at the end of the legal process, and we'd reaffirm our belief that a breakup -- we do not believe a breakup will take place. Today's ruling is very clear on reversing the District Court in that area.


BAKHTIAR: The legal battle between Microsoft and the federal government has spanned three years.

Steve Young has been following the case from the beginning. He gives us an overview.

(BEGIN VIDEOTAPE) STEVE YOUNG, CNN CORRESPONDENT (voice-over): Capping a landmark anti-trust trial, District Court Judge Thomas Penfield Jackson ruled Microsoft is a predatory monopolist -- in his words, "a company that put its oppressive thumbs on the scales of competitive fortune" -- a company whose CEO the judge simply didn't believe, a company so afoul if the law, it has to be split up.

That was a huge Justice Department win, but then the government suffered its first major defeat in the case when the Supreme Court refused the Justice Department's request that it hear Microsoft's appeal directly.

Instead, it kicked it to the Court of Appeals; that court had sided with Microsoft before. In late February, the Court of Appeals, which usually hears a case for just 30 minutes, allotted seven hours for oral arguments, an extraordinary amount of time.

WILLIAM KOVACIC, GEORGE WASHINGTON UNIVERSITY: They've never done it for a matter involving key issues of business regulation. They've never even done it for a matter involving pressing questions of civil rights and civil liberties. It's truly astonishing.

YOUNG: The court roughed up the government, but it also put Microsoft on a griddle after its lawyer claimed the company put its Web browser on Windows not to crush Netscape, but to help consumers.

The issue is what the law calls tying. It's generally regarded as the weakest part of the government's case. If that part of the government's victory falls, most experts believe the Appeals Court would say Microsoft needs to be reined in, but a breakup goes too far. When government lawyer John Roberts said Microsoft violated anti-trust law by refusing to let PC companies drop Microsoft Web browser, Judge Raymond Randolph pounced.

JUDGE RAYMOND RANDOLPH: It's almost like you're saying I'd like to buy a clock radio without a clock.

YOUNG: The court didn't seem to swallow Microsoft's argument that it's not a monopoly because it has to compete with the companies that sell software for practically any kind of device, not just PCs. The jurists skewered Judge Jackson for giving interviews about the pending case, including one in which he compared the company to drug dealers.

JUDGE DAVID B. SENTELLE: What's the unbiased reason for a judge to go into his chambers and hold secret conferences with reporters to say bad things about a litigant?

JUDGE DAVID S. TATEL: There are lots of things that we think and feel about advocates and parties during the course of the proceeding. It doesn't mean that we're entitled to say because those feelings developed during the course of a proceeding, we're going to run off our mouth in a pejorative way, because there is an appearance problem.

Steve Young, CNN Financial News, New York.


BAKHTIAR: The U.S. Justice Department, which, along with 19 states, sued Microsoft, is reviewing Thursday's appeals court ruling. Government officials say they're considering what move to make next. Their options include an appeal to the U.S. Supreme Court, more proceedings in a U.S. District Court or a settlement with Microsoft. Bill Gates says he'd be interested in settlement talks with the government.

Now, Tim O'Brien reports on what's next for Microsoft now that the federal appeals court has thrown out most of Judge Thomas Penfield Jackson's ruling.


TIM O'BRIEN, CNN FINANCIAL NEWS CORRESPONDENT (voice-over): Both the Justice Department and Microsoft were declaring victory today.

GATES: We're very pleased that this ruling reverses the lower court ruling and sets a much higher standard for these issues than the lower court applied.

CHARLES JAMES, DOJ ANTITRUST GROUP: Today's decision represents a very significant victory for the antitrust division on the core claim in the Microsoft case.

O'BRIEN: Significantly, the court of appeals upheld much of Judge Jackson's decision, finding that Microsoft had engaged in a pattern of antitrust violations. It sent part of the case back to the lower court for reconsideration by another judge.

The court did not directly address whether breaking up the company was the correct remedy, but it did note how extraordinary a remedy divestiture is, and that: "The cases on which the government relies in arguing for the split of Microsoft have involved entities formed by mergers and acquisitions," not the case with Microsoft.

That will surely be considered in any new hearings, should there even be a new hearing. Many analysts say today's decision, coupled with a new administration more sensitive to business, could pave the way for an out-of-court settlement.

ALAN WEINSCHEL, WEIL, GOTSHAL & MANGES: I think it makes it a lot easier to settle the case for Microsoft, because it can address the specific issues that the court of appeals were violations, with conduct remedies. In other words, I won't do that anymore.

O'BRIEN: A big question mark: The appeals court did not decide whether it was illegal for Microsoft to bundle its Windows operating system with its Internet Explorer browser. The court set some new guidelines for re-examining that question.

Three former solicitors general told MONEYLINE tonight they did not believe the government would appeal, and Microsoft might not either.

BILL WHYMAN, PRECURSOR GROUP: Both sides should declare victory and move on, and I think that's what will happen.

O'BRIEN (on camera): The decision does offer something for everyone, but it also casts doubt on whether the government will ever be able to break up Microsoft. That's a big victory for the company. And it will strengthen Microsoft's hand should there be any settlement talks.

Tim O'Brien, CNN Financial News, Washington.


BAKHTIAR: The Internet has become a part of our everyday lives. There are 570 million e-mail accounts today. By 2005, the Internet will reach 67 percent of U.S. households and online retail in the U.S. accounts for $40 billion. But as the Internet has grown, so has online crime.

Mara Wilcox looks at what has happened so far and what you can do to protect yourself.


MARA WILCOX, CNN CORRESPONDENT (voice-over): Like many high schoolers, 18-year-old Andrew Pfeffer knows more about the Internet than his parents.

JAMES PFEFFER, PARENT: My kids are teaching me how to access the information, how not to access certain types of information, how to block information.

WILCOX: But when those tables are turned and kids know more than their parents, it raises concerns.

MARA PFEFFER, PARENT: They go into their rooms, they close the doors and parents don't even take an interest in what's going on. They just think perhaps they're doing work or just having fun or playing a game. But I think parents really have to know exactly what their children are involved with and that's a concern today.

WILCOX: Crooks have found a new place to take advantage of kids: the Internet. Computer viruses, stock hoaxes and even identify theft are a few of the big scams that have taken place in the world of cyberspace.

Andrew Pfeffer is a good person to ask. His common sense won him the National Consumer League's Life Smarts Competition.

ANDREW PFEFFER, AGE 18: It's a double-edged sword. If you know what you're doing, it's a godsend. If you don't know, it's a disaster. So just continue to read up about it and just be careful. And if you do that, there's no problems with the Internet.

WILCOX: First, you need to be wary of something as simple as e- mail. The "I love you" virus, the most destructive computer virus to date, spread through Microsoft Outlook e-mail. BEN VENZKE, COMPUTER VIRUS EXPERT: They typically spread by the e-mail software that we use so that if you would receive a message that would be infected and you open that message up, what the virus will do, or in some cases they're called worms, it will look at your address book and all of your friends and other people that you send messages to, it'll instantly send itself out to all of those addresses and then so on and so forth around the world.

WILCOX: Authorities traced the virus to Manila, the capital of the Philippines. The virus was first uploaded onto the Web from a computer in 23-year-old Onel de Guzman's Manila apartment. The computer school dropout was arrested last May. It sounds like just a prank, but the "I love you" virus wiped out PC hard drives, crippled e-mail systems and cost businesses at least $1 billion.

PFEFFER: It's not worth it downloading the "I love you" virus just to see maybe what this letter says and then finding out that your entire computer's destroyed. So I mean just be intelligent, just make sure that you know the person that's sending it to you because if you don't, odds are it's something not too great.

WILCOX: It's also a good idea to have anti-virus protection software on your computer. You should update your software on a regular basis by going to the software Web sites and downloading the latest updates.

SUSAN GRANT, NATIONAL CONSUMERS LEAGUE: One of the things that makes the Internet so ripe for fraud is that it's very easy to post something on the Internet and then disappear.

WILCOX: Another crime to hit the Web: stock fraud. In one infamous case, 15-year-old Jonathan Lebed was charged with engaging in a stock pump and dump scheme. That's when investors buy inexpensive stocks, post messages on the Internet pumping or promoting the stock and then sell or dump the stock when it rises in value.

Lebed made thousands of dollars on each trade, but in settling with the government, gave back $285,000. It was the first time the government charged a minor in a case like this and it's nothing to take lightly.

PFEFFER: The fact that he was glorified as a hero, that's the worst part. I mean it's still a federal crime, and he's going to have this on his record for the rest of his life. And when he has to apply to colleges or apply for a job, the last thing you want to put on it is, oh yeah, I had this little defrauding incident of a couple of hundred of thousand dollars on the Internet.

WILCOX: The bigger lesson: Lebed's scam worked because Web users believed the phony messages he was posting. Don't fall into that trap.

VENZKE: When you're online, really you have to kind of look at things with a cautious eye and be an educated viewer or surfer, if you will, and not just accept everything that you find at face value. WILCOX: It doesn't matter if you're buying stocks or researching a term paper, know your source, stick to reputable sites and never take advice from strangers.

The most recent high-profile scam to hit the net: identity theft. Brooklyn busboy Abraham Abdallah was arrested for allegedly using the Internet to steal personal identity information from celebrities, including Martha Stewart, Steven Spielberg and Oprah Winfrey. Prosecutors believe he was hoping to use that information to divert their funds and those of more than half of the Forbes 400 richest people list. If convicted, Abdallah faces a maximum sentence of 30 years in prison and a seven-figure fine.

While identify theft is not likely to happen to you, you do need to be careful in giving personal financial information out over the Internet.

GRANT: Not everything on the Net is what it seems, so you really need to check out the person or the company that you're dealing with. It's very easy on the Internet to pretend to be somebody that you're not, to pretend to have something that you're not, so teens need to be careful, just like everybody else.

WILCOX: Always keep your password secret. Remember that e-mail is not private. Think of writing on a postcard, it's possible for others to read it. Watch out for SPAM, which is unsolicited e-mail. Delete them if you're not interested. And remember, it's up to you what personal information you want to provide.

PFEFFER: Take everything with a grain of salt. And just take a step back whenever you're reading something and say, all right, this person, do I really trust them?

WILCOX (on camera): With the right precautions, you'll have no problems in cyberspace. And while the Internet makes it easier for crooks to conceal their identities, criminals leave electronic footprints in cyberspace making it easier for the authorities to track them down. And for all the big cases so far, the authorities have followed those footprints successfully.

Mara Wilcox, CNN NEWSROOM, New York.


BAKHTIAR: Well, you just heard about computer fraud, in "Worldview" today, you'll learn about computer animation. Have you seen the movie "Shrek" yet? Well either way, you're going to hear all about the film's special effects and you'll find out plenty about elephants and Africa as we focus on attempts to preserve an ecological heritage.

But first, on a more serious note, former Yugoslav President Slobodan Milosevic has been sent to The Hague to face ware crimes charges. The Serbian government turned Milosevic over after ignoring a decision by the Yugoslav Constitutional Court that would have stalled the move. Milosevic was indicted by the U.N. War Crimes Tribunal for war crimes allegedly committed during the 1999 Kosovo conflict. The former Yugoslav president will be the first head of state to be tried by the international tribunal.

SHELLEY WALCOTT, CO-HOST: Africa is the second largest continent in the world after Asia. The Dark Continent, as it's called, is bounded by the Atlantic Ocean, the Mediterranean Sea, the Red Sea and the Indian Ocean. Africa contains a vast amount of mineral resources, including some of the world's largest reserves of fossil fuels, metallic ores and gems and precious metal. But even more precious to Africa are the continent's sources of water.

Femi Oke looks at how some African countries are learning to work together to preserve a crucial river system.


FEMI OKE, CNN CORRESPONDENT (voice-over): Africa's fourth- longest river system flows through several countries in the southern part of the continent. But border issues between those countries are causing problems for wildlife that lives off the river.

DR. KAREN ROSS, CONSERVATION INTERNATIONAL: It's important to look at the Okavango Delta as the ecosystem that is not just in one country, but spans other countries, and therefore, it should be looked at in regional terms.

OKE: The delta has its beginnings in central Angola. It travels southeastward for 1,600 kilometers, flowing through Namibia and ending in northern Botswana. There it creates an oasis in the Kalahari Desert, rich with plant and animal life.

During the dry months, the animals stay close to the river, but when the rains come, they tend to move away and often become trapped by human settlements and the man-made barriers.

Conservationists say 120,000 elephants are now trapped in Botswana, with no natural routes to follow back to the river. They're literally stranded between fences.

ROSS: It's vital that a wildlife corridor be kept open so that there can be movement of animals from the Okavango to other protected areas.

OKE: The fences are necessary to help control livestock diseases, so conservation experts recommend the countries work together to realign the fences, leaving a clear path for the animals.

Another option is to develop transboundary conservation areas, or peace parks -- wildlife parks that transcend national boundaries.

IAN KHAMA, BOTSWANA VICE PRESIDENT: The transfrontier park represents a tremendous opportunity with regards our elephant populations -- our expanding elephant populations -- to be able to reinstate the previous migration paths that elephants used to use in days gone by between four or five countries in that region.

And once that transfrontier park has been reestablished, we expect to see those migration patterns being reestablished as well.

OKE: By working together to preserve their common ecological heritage, there's hope the countries can also mend fences over their political and cultural differences.

Femi Oke, CNN.


TOM HAYNES, CO-HOST: Alright, heads off the desk, it's time to head to the movies, a popular summer leisure activity. In the spotlight today, a summer release from DreamWorks called "Shrek."

Lauren Hunter has more on the animated comic fairy tale.


LAUREN HUNTER, CNN CORRESPONDENT (voice-over): Once upon a time, there was a beautiful princess held captive by a fire-breathing dragon.


VOICE OF MIKE MYERS AS "SHREK": Are you Princess Fiona?

VOICE OF CAMERON DIAZ AS PRINCESS FIONA: I am, awaiting a knight so bold as to rescue me.


HUNTER: Her prince charming was a big, green, ornery ogre named Shrek, and his sidekick, Donkey.


DIAZ: You didn't slay the dragon?

MYERS: It's on my to-do list.


HUNTER: The villain is the very short and very evil Lord Farquaad, out to rid his kingdom of fairy tale characters.


VOICE OF JOHN LITHGOW AS LORD FARQUAAD: Now tell me, where are the others?


LITHGOW: Tell me, or I'll --

UNIDENTIFIED ACTOR: No! Not the buttons. Not my gumdrop buttons!


HUNTER: It's an untraditional love story in a land far, far away, where nothing, and no one, is quite as they seem.


VOICE OF EDDIE MURPHY AS DONKEY: Before this is over, I'm going to need a whole lot of serious therapy.


HUNTER: Mike Myers, Eddie Murphy, Cameron Diaz and John Lithgow are the voices behind "Shrek."

MYERS: When I watched the movie, when it was all completed and stuff, I forgot that I ever worked on it and I laughed, and I was like, "Oh, watch out." I was like, you know, little kids when they go to pantomime, "Look out behind you, there's a bad guy." I got totally into it, and at the end, I like cried, and I was like, "I'm not crying, I've got something in my eye." I completely forgot it was me and I just thoroughly enjoyed it.

HUNTER: So did the crowds at the Cannes Film Festival. "Shrek" is the first animated film in 28 years to compete for the festival's main prize, the Palme d'Or. The cast says the technology is terrific, but it's the story that's timeless.

MURPHY: The acceptance of who you are and loving yourself for who you are. That's what I like about it.

DIAZ: What you look like doesn't matter and that who you are is what's important, and that you find the same in everyone else, that all people are created equal.

LITHGOW: Every fairy tale should have a moral. Its moral is a perfectly obvious one -- be happy with who you are -- but it's a very touching one.

HUNTER: And one likely to entertain kids of all ages.


MURPHY: You love this woman, don't you?


MURPHY: You want to hold her?


MURPHY: Please her?


MURPHY (singing): Then you got to, got to, got to try a little tenderness. (END VIDEO CLIP)

HUNTER: Lauren Hunter, CNN Entertainment News, Hollywood.


WALCOTT: More from Lauren Hunter as we continue our look at "Shrek," a film that has whimsy and wizardry. This time, we take a special look at its special effects.


LAUREN HUNTER, CNN CORRESPONDENT (voice-over): Like all good fairy tales, "Shrek" has a hero, his sidekick...


EDDIE MURPHY, ACTOR: You definitely needs some Tic Tacs or something, 'cause your breath stinks!


HUNTER: ... a beautiful princess...


CAMERON DIAZ, ACTRESS: You must know how it goes: A princess locked in a tower and beset by a dragon is rescued by a brave knight.


HUNTER: ... and a villainous nobleman ruling a kingdom of persecuted fairy tale characters.


UNIDENTIFIED ACTOR: You're a monster.

JOHN LITHGOW, ACTOR: I'm not a monster here. You are -- you and the rest of that fairy tale trash poisoning my perfect world.


HUNTER: It took five years and 275 artists, animators and engineers at Pacific Data Images to bring that world to life.



MIKE MYERS, ACTORS: Oh, no, no, no. Dead girl off the table!


ANDREW ADAMSON, CO-DIRECTOR, "SHREK": The whole film is...

VICKY JENSON, CO-DIRECTOR, "SHREK": A special effects shot.

ADAMSON: A special effect.

HUNTER: The filmmakers' first priority was creating believable- looking characters.

JENSON: Our technical directors built a very complex facial system for the characters, to try and be capable of those kind of subtle movements that we're so familiar with. I mean, this is the first time humans have been so featured in a CG film. So they built from the inside out. They started with bones and muscles and layers of skin on top of that.

And then our animators actually had to work in an anatomical way to not only find those kind of subtle expressions that all of us take for granted -- so they're amazing observers of human behavior -- but they had to know what muscles to pull.

HUNTER: They then created 36 separate locations in "Shrek"'s world, focusing on nuances of motion and light.


MURPHY: This is going to be fun! We can stay up late swapping manly stories. And, then in the morning, I'm making waffles!


ADAMSON: Now, it's not like you can say: Get me a dusty room and I'll go and shoot there.

You have to have someone make the dust for you. So there's a pretty high level of detail that's been put into pretty much everything.

HUNTER: DreamWorks partner and "Shrek" producer Jeffrey Katzenberg calls the animation "revolutionary."


VINCENT CASSEL (singing): I steal from the rich and give to the needy.

UNIDENTIFIED ACTOR (singing): He takes a wee percentage.

CASSEL (singing): But I'm not greedy. I rescue pretty damsels. Man, I'm good.

UNIDENTIFIED ACTORS (singing): What a guy, monsieur Hood.

CASSEL (singing): Break it down.


ADAMSON: But when you go into a film like this, you set your aims very high. You go in saying, "I have no idea how we're going to achieve this," and you hope the people around you are going to help you get there. And we were lucky enough to have so many of our expectations exceeded in this case.

HUNTER: And based on this weekend's box office, audiences agree.


MURPHY: Wow! Let's do that again!


HUNTER: Lauren Hunter, CNN Entertainment News, Hollywood.


BAKHTIAR: As we told you last week, we're putting together a special "Border to Border" series this summer. CNN NEWSROOM's Jason Bellini will be bringing us a glimpse of what kids from the Mexican border to the Canadian border are doing this summer.

His first stop: Tucson, Arizona. His first encounter: a group of kids at a club called Skrappy's.


JASON BELLINI, CNN CORRESPONDENT (voice-over): Don't even try to make out the words to this music. It's as hard to understand as what's going on inside the mosh pit. The scene is called "Hard Core." Kids here know that most people wouldn't get why so many of them consider Skrappy's to be one of the most positive things in their lives.

Matt McCord is 16 years old.

MATT MCCORD, 16 YEARS OLD: I've done all I can to see this club live. It's a part of me.

BELLINI: Clubs usually come and go, especially ones like Skrappy's that are always losing money. But Skrappy's is about more than music. It's a place where kids can find community and support when they don't find enough elsewhere. And thanks to the Mohawk's (ph) kids, who have lobbied city council to keep it open, and the owners who are like surrogate parents to many of the kids, Skrappy's has become an underground Tucson institution.

KATHY WOOLDRIDGE, SKRAPPY'S OWNER: We're like the weekend, you might say. That's our joke around here.

BELLINI: The what?

WOOLDRIDGE: The weekend dad. You know how when you get divorced, the weekend dad...


WOOLDRIDGE: ... takes you out and all you have is fun. And then moms wench at home.

BELLINI: No school nights forcing them home. The local taco joint is where the curfew free of the Skrappy's crowd end up most nights after closing, where Matt explains to me a few things.

What are the X's on the hands for?

MCCORD: That represents being straight edge: abstaining from drugs, violence, promiscuous sex,...


MCCORD: ... alcohol.

BELLINI: Matt says straight edge is one of the many subscenes that find a home base at Skrappy's. They even have their literature stand in the club.

The movement, which encourages clean, drug free living among punk youth, got a bad wrap a few years back, Matt says, when a few militant straight edgers in other cities attacked people they saw smoking and engaged in other violent demonstration. He and his friends don't associate themselves with that.

Skrappy's may not be the boys or girls club, but it is a place where drugs are aggressively kept out and many teens find support to improve their lives.

Whenever he and friends talk about Skrappy's, the conversation quickly turns to the owners Kathy and Bill.

DAVID MERTZ, AGE 17: I've never really had like a dad in my -- in my life and Bill helped me do all like the dad stuff -- like fixing my car.

MCCORD: They've helped out a lot of kids, you know, in their times of need. If their family's going down or there's something going down with their family, they'll help them out -- let them stay for a night or something, you know.

BELLINI: The parking lot out in front of Skrappy's is as much a hangout as the inside of the club.

(on camera): Some nights, like this one, Skrappy's only has a handful of paying customers. But from sundown until around midnight, you'll find people hanging out here, if not for the music, then for the company.

WOOLDRIDGE: I see a lot of these kids at 14, and then I see them at 21. I watched them grow. A lot of them got scholarships to college and a lot flip burgers. You know, there's such a big diverse scene here.

MCCORD: I come to shows and I can talk to every single person here because we have something in common. And what -- and maybe that's what it is, maybe we just have Skrappy's in common with each other.

BELLINI (voice-over): Few on the outside get their musical taste, get their dancing style or get how a club inspires such devotion. But Matt and Kathy know that Skrappy's, somehow, reaches some hardcores.

Jason Bellini, CNN, Tucson, Arizona.


Jason continues traveling "Border to Border" next week. Monday, he'll give us an inside look at an Apache coming of age ceremony.

Until then, have a great weekend.

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