Full version Microsoft As A Monopoly

Microsoft As A Monopoly

This print version free essay Microsoft As A Monopoly.

Category: Business

Autor: reviewessays 23 May 2011

Words: 843 | Pages: 4

“Microsoft Corporation, is a multinational computer technology corporation with global annual revenue of US$44.28 billion and 71,553 employees in 102 countries as of July 2006. It develops, manufactures, licenses, and supports a wide range of software products for computing devices. Headquartered in Redmond, Washington, USA, its best selling products are the Microsoft Windows operating system and the Microsoft Office suite of productivity software, each of which has achieved near-ubiquity in the desktop computer market. Microsoft possesses footholds in other markets, with assets such as the MSNBC cable television network, the MSN Internet portal, and the Microsoft Encarta multimedia encyclopedia. The company also markets both computer hardware products such as the Microsoft mouse as well as home entertainment products such as the Xbox, Xbox 360 and MSN TV” (“Microsoft”).

By law a monopoly is not allowed to exist in the US. It has been long debated whether Microsoft is a monopoly or not? Among other charges Microsoft was charged with “monopolizing the computer operating system market, integrating the Internet Explorer web browser into the operating system in an attempt to eliminate competition from Netscape, and using its market power to form anticompetitive agreements with producers of related goods” (SWLearning).

Firstly, with the operating system market there are no actual barriers to entry. Any one firm can enter into the market and introduce their operating system. A number of powerful firms have indeed done so. Firms like Apple, IBM, Sun Microsystems and Oracle all have come with their operating systems to compete with Microsoft Windows. However they have been unable to grab a substantial share of the market. This does not necessarily mean that Microsoft has a monopoly in this field; it could mean that the products that these firms have come up with are not up to standards or superior than the Windows operating system. “The current popularity of Windows does not mean that its market position is unassailable. The potential financial reward for building the "next Windows" is so great that there will never be a shortage of new technologies seeking to challenge it” (usdoj). In my personal view, if there was something better than Microsoft Windows I would undoubtedly have opted for the other Operating System.

Also, if Microsoft were using their monopoly power they would have charged a lot more for the Operating System than they actually are. “Under current interpretations of U.S. antitrust law, Microsoft can be found guilty of monopolization in the computer operating systems market only if it used its market dominance to charge a price that exceeds the competitive price” (swlearning). At the current stage where every one is dependant on computers and Microsoft products are found and used almost everywhere and most individuals are familiar with its interface Microsoft could have charged a very high amount for their Operating System and most firms and individuals would have paid for it at that price as they would have had no other choice. However Microsoft did not or does not do that. Infact they charge a price where they can be sure that their product will sell as many copies as they can as they want their operating system to be on every computer in the world. This tells us that Microsoft is more of a competing firm rather than a monopolist.

Many consider Microsoft a “Just Monopoly” because it acquired the current monopolistic state through innovation and its superior products. According to the website usdoj.gov Microsoft invests heavily in research and development. This tells us that Microsoft wants to stay a step ahead of its competitors. The market is still open and with the current potential for profit in this field a number of powerful firms have tried and entered the market and come up with operating systems competing with Windows. Linux and Macintosh are a few of the examples. “The defense attorneys in the Microsoft antitrust case argued that it was Microsoft’s superior products that led to its capture of 90 percent of the market” (Colander).

Another argument is the fact that Microsoft uses its market share in the Operating System market to gain an advantage in the marketing and selling of some of its other products. A major debate was against Microsoft implementing the Internet Explorer software together with Windows to gain an unfair advantage over Netscape’s browser. However the amusing part is that Microsoft does not gain much from implementing the Internet Explorer software as it does not charge anything for it. It just provides the user with is necessary to get started. And in my opinion having a web browser is one of the few necessary things you must have to get started. Also Microsoft does not prevent its users from installing any other third party browsers. Users are free to un-install most of Microsoft’s products and use any other third party software of their choice.

All in all I strongly disagree with the fact that Microsoft is a monopoly. Microsoft did not gain market share by using unfair advantages but however gained most of its market share through its innovation and superior products.

http://www.usdoj.gov/atr/cases/f3800/msjudgex.htm

http://www.swlearning.com/economics/policy_debates/microsoft.html

http://money.cnn.com/1999/11/05/technology/microsoft_finding/