Dispatches > The Buzz

The Buzz

Issue: "Money to burn," April 15, 2000

Federal Court rules that Microsoft violated antitrust law
Will judge break Windows?
Guilty! Microsoft joined Standard Oil and AT&T in the ranks of companies finding the losing end of an antitrust suit. PC users might not be affected by the decision for some time, but the technology sector is being shaken hard. U.S. District Judge Thomas Penfield Jackson ruled that Microsoft violated the Sherman Antitrust Act by misusing its monopoly power to "quash innovation that threatened its monopoly position." Particularly egregious, he claimed, was the stifling of upstart competitor Netscape by "unlawfully tying its Web browser to its operating system." He opened the door to further lawsuits under state anti-competition laws. Mr. Jackson will spend the next few months trying to figure out a suitable punishment. So-called "remedies" range from changing Microsoft's business practices to tobacco suit-style fines to a corporate breakup into several "Baby Bills" that would take chunks of the company's product lines. Microsoft vowed a fight in federal appeals courts that could last until 2002. "Until the appeal is over, nothing is settled. We've learned that from experience," said Microsoft chief executive Steve Ballmer. Two days after the decision, Mr. Gates went to Washington, D.C., to meet President Clinton and Federal Reserve chief Alan Greenspan at a White House conference on technology. His speech topic was a White House favorite, the so-called "digital divide" between rich and poor. Whether he won any sympathy remains to be seen.

Ups & Downs of the Week
The Reagans: The House last week voted to give Ronald and Nancy Reagan the Congressional Gold Medal. The House approved the award for the former first family for restoring national confidence, fighting substance abuse, and ending the Cold War. The pair has been out of the public eye for several years due to the former president's affliction with Alzheimer's disease. The city of Jacksonville, Fla., tried to keep the sex trade out of town with strict zoning laws, but last week the U.S. Supreme Court blocked their enforcement. The justices, without comment, left intact an 11th Circuit Court of Appeals ruling that called the zoning ordinance an unlawful "prior restraint" on sexually oriented businesses' freedom of expression. The Supreme Court had given communities broad leeway since 1976 to restrict sex shops. Dennis Rodman: The Worm isn't doing well right now. Mr. Rodman's basketball career ended this season when the Dallas Mavericks released him after only 13 games. Now the former rebounding phenom has pleaded innocent to a misdemeanor drunken driving charge. The charge stems from his arrest Dec. 22, when he allegedly drove with a blood-alcohol level of 0.15-nearly twice the legal limit of 0.08. Mr. Rodman faces a pretrial hearing in May in Newport Beach, Calif. House passes partial-birth abortion ban
Veto Bill
Will President Clinton once again veto a ban on partial-birth abortions? The House passed the ban by a 287-141 vote, just over the two-thirds margin necessary to override a presidential veto. But the Senate last year fell short of a veto-proof majority, voting 63-34 in favor of the bill. As drafted, the House bill bans abortions in which a doctor delivers "some portion of an intact living fetus until the fetus is partially outside the body of the mother" and "kills the fetus while the intact living fetus is partially outside the body of the mother." The only exceptions would be in cases in which the life of the mother was threatened. "Everybody in this room knows this is wrong. It is not legally or morally defensible," said Rep. Rick Hill (R-Mont.) during the floor debate. Abortion supporters, on the other hand, claimed this was a threat to Roe vs. Wade. "Proponents of this bill are not just chipping away at the right to choose, they are taking a jackhammer to it," said Rep. Louise Slaughter (D-N.Y.). The GOP went on the pro-life offensive after the bill passed. RNC Chairman Jim Nicholson called on Hillary Clinton and Al Gore to back down from their support of partial-birth abortion. "This is one Hillary-Gore flip flop Republicans will embrace," he said. Even if the president succeeds, the Supreme Court has blocked the administration from participating in arguments when a Nebraska case is heard that could determine the fate of 30 states' partial-birth abortion bans. Solicitor General Seth Waxman, who was to appear, had filed a friend-of-the-court brief claiming the state law was unconstitutional. The partial-birth abortion ruling, expected in June, will be the first major Supreme Court abortion decision since the high court reaffirmed Roe in 1982. MSU students celebrate Title win
Victory dance
Michigan State basketball fans managed not to riot after their team beat Florida for the NCAA championship last week. Instead they set off fireworks, honked horns, and waved from balconies in East Lansing, Mich., after the Spartans defeated the Gators 89-76. Last year was a disaster. When Michigan State lost to Duke in the semifinals, more than 10,000 people ran through East Lansing. Some fans overturned cars, set bonfires, broke windows, and smashed parking meters. Police arrested 132 people. Of the 113 people later convicted, 94 went to jail. This year, police arrested 26 people (including 13 MSU students), mostly on indecent exposure, disorderly conduct, or alcohol-related charges. Drug office enlists media
Uncle Sam's magazines?
If the government likes the piper's music and pays the piper's boss, has it called the tune? The White House Office of National Drug Control Policy offered financial credits to at least six magazines-including newsweekly U.S. News & World Report-that ran stories discouraging drug use. The online magazine Salon reported that the drug policy office bought anti-drug ad space and ran anti-drug ads in U.S. News, The Sporting News, Family Circle, Seventeen, Parade, and USA Weekend. As a condition of the purchases, those magazines agreed to run a free anti-drug ad for each one the government bought. But the magazines submitted anti-drug articles to the office to fulfill the requirement. The question now for the journalists involved is, what did they know and when did they know it? Did an agreement with the government prompt their anti-drug articles? Several of the magazines' editors told Salon that they had no knowledge of any such agreement, while others said they had only partial awareness. U.S. News editor Stephen G. Smith told the Associated Press that the magazine's editorial staff was "utterly ignorant of any kind of arrangement or even the hint of any kind of arrangement" and that the government never influenced the content of articles. A White House spokesman also said the government made no attempt to dictate content. The drug policy office gave similar credits to television networks for anti-drug messages on such shows as ER and The Practice. Tech index crashes, then recovers
Wacky NASDAQ
Check your seat belts! The day after the Microsoft antitrust ruling, the NASDAQ exchange tanked and then recovered in the scariest day since the 1987 stock market disaster. The composite index, which is disproportionately weighted with technology companies, fell more than 500 points on April 4, and then bounced back before the day's end of trading. "Well friends, this is what a crash looks like," MetaMarkets mutual fund manager Don Luskin told investors on his website just minutes before the recovery. The crazy day was a correction from the ever-escalating highs of a few months ago. Many factors set it up; the negative ruling touched it off. Fed Chairman Alan Greenspan hiked interest rates just days before in an effort to cool the economy and lessen what he fears is an inflationary "wealth effect" created by the stock boom. During the last week of March, Wall Street wizards started sending off some bearish signals about technology stocks. High-profile technology bull Abby Joseph Cohen, chief investment strategist at Goldman Sachs, announced she was cutting back on some stocks. "Many of the technology shares were given the respect they deserve over the last 18 months, and are no longer undervalued," she said. Then guru Mark Mobius, head of the Templeton Emerging Markets Group, predicted that an Internet stock crash could come soon. "Some stocks will be 90 percent or 50 percent down," he said. Such comments were big parts of the buzz floating around before Big Tuesday.

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