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Is Microsoft a monopoly?On what basis did the court conclude that Microsoft was...

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ranger1980 | Student, Undergraduate | Valedictorian

Posted February 3, 2012 at 12:30 PM via web

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Is Microsoft a monopoly?

On what basis did the court conclude that Microsoft was amonopoly (see Market Share)? What was Microsoft's market share of Intel-compatible PC operating systems? Of all operating systems, including those of Apple computers? What evidence did the court cite in claiming that Microsoft charged above-competitive prices (see Microsoft's Pricing Behavior)?

Refereces : In 2002 a U.S. court of appeals imposed remedies relating to a lower court's findings that Microsoft had a monopoly in personal computer (PC) operating systems and had maintained its monopoly through illegal actions. At theU.S. Justice Department's Web site, www.usdoj.gov, use the DOJ Agencies listing to find Antitrust Division and then Antitrust Case Filings. Locate U.S.v. Microsoft and select District Court

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted February 3, 2012 at 1:32 PM (Answer #2)

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You can find this stuff at this link.  It says there that Microsoft had had 95% or more of the market for PC browsers for the last few years and at least 90% for years before that.  Even if you included the Mac OS, Microsoft would still have more than 80% of the market.  That's one reason why the court found that it was a monopoly.

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booboosmoosh | High School Teacher | (Level 3) Educator Emeritus

Posted February 3, 2012 at 1:37 PM (Answer #3)

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I'm not strong in business, but my sense has always been that a monopoly is when one company controls a corner of the market and has no competition. I know that deregulation often puts an end to this, and competition is encouraged with the presence of other similar businesses who provide the same goods or services.

Each market structure consists of diverse characteristics; a monopoly is defined as a persistent market situation where there is only one provider of a kind of product or service.

The central idea with a monopoloy is that there is no competition whatsoever.

A firm is a monopoly if it is the sole seller of its product and if its product has no close substitutes.

Personally, I tend to think that Microsoft is not a monopoly. Its biggest competitor (I think) is Apple. Apple is not a company to be dismissed casually, but it does not have Microsoft's market share. There is a great deal of competition between the two companies. While Microsoft is a big name in the market place, Apple holds its share of not only loyal customers but goods and services that Microsoft cannot duplicate or compete with.

In terms of market share, it was reported a year ago today online that Windows' market share had dropped below ninety percent. And it is not because sales were falling, but because there are so many other "mobile operating systems" available: Apple iOS and Android... Macs do very well, able to perform operations with specialized software that Windows cannot—which impacts Microsoft.

While Microsoft may be used to dominating specific parts of the market, it does not control them. There are other companies free to operate and compete with Microsoft. And my understanding of a monopoly is that it can only exist if no one else is permitted to compete in the market place.

With that said, in 1999 and 2000, the courts ruled that Microsoft was a monopoly for PCs. The Justice Department noted that this ruling was something that would benefit consumers. When there is competition, prices must also be competitive. However, because the market share is so high, it does not offer a great deal of room for competition to get a foothold, so I expect that is why Microsoft was found to be a monopoly.

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brettd | High School Teacher | (Level 2) Educator Emeritus

Posted February 3, 2012 at 1:41 PM (Answer #4)

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In my opinion they were, and in many ways still are.  They used classic strategies of horizontal integration to squeeze out or co-opt competitors and used heavy-handed bundling tactics and contracts to ensure their product was on the vast majority of desktops and laptops, as opposed to competing through traditional methods or simply making the best product.

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vangoghfan | College Teacher | (Level 2) Educator Emeritus

Posted February 3, 2012 at 2:04 PM (Answer #5)

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Microsoft seems to have been a near-monoply for all the reasons mentioned above. It's important to prevent monopolies, so I'm glad the government took Microsoft to court. Does anyone have any thoughts about other monopolies that are in danger or arising?  Is Google, for instance, engaging in any monopolistic practices?

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accessteacher | High School Teacher | (Level 3) Distinguished Educator

Posted February 3, 2012 at 3:00 PM (Answer #6)

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Microsoft was deemed to be a monopoly by the courts precisely because it owned such a great percentage of the market. The problem with monopolies is precisely that they prevent a healthy competition and other business competing with them, which is actually better for business. Microsoft was therefore identified as a monopoloy and was forced to cut their production as a result.

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enotechris | College Teacher | (Level 2) Senior Educator

Posted February 3, 2012 at 7:16 PM (Answer #7)

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Just because a company has a great percentage of the market does not deem it a monopoly.  Microsoft did so much right for so many years, and actually earned its market position.  However, like other companies in other industries throughout history, once it got to a position of prominence, it began to act as a coercive force in the market.

In a truly free market, monopolies cannot exist, because a free market allows for competition. "Cornering the market" always implies some element of coercion, either through "special" government privileges or outright illegal activities.  In this case, the government did the right thing by requiring Microsoft to "unbundle" its software, which was effectively killing the competition unfairly.

Even so, monopolies cannot survive for long -- time and technology marched forward, and the PC platform, as others have noted, has been replaced to a large extent.  The technological advancements may have been slowed a bit by Microsoft's activities, but other companies, by improving the game, have altered the industry for the better.  Level competition yields the best results.

 

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literaturenerd | High School Teacher | (Level 2) Educator Emeritus

Posted February 3, 2012 at 10:42 PM (Answer #8)

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My thoughts, which may be wrong, were that a monopoly was a business which offered products or services which society needed. Given that society needed these services or products, a business which could be defined as a monopoly would have no competition and could charge anything they wished.

Apple has competitors. People can choose who to purchase products from. Therefore, in my mind, they could not be considered a monopoly.

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litteacher8 | Middle School Teacher | (Level 1) Distinguished Educator

Posted February 3, 2012 at 11:08 PM (Answer #9)

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Basically, Microsoft was preloading its browser, Internet Explorer, onto all computers with its operating system, Windows. Since Apple did and still has a much smaller share of the personal computer market than Microsoft, it was considered unfair of it to include its browser because most people would just automatically use it and not choose for themselves.
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Karen P.L. Hardison | College Teacher | eNotes Employee

Posted February 4, 2012 at 5:16 AM (Answer #10)

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Part of the current definition of monopoly relates to pricing. It is the intention to control competition and thus control pricing. This is by agreement and intention between one or more persons aiming for exclusivity over the market. By this definition, Microsoft had a monopoly of intent and exclusivity affecting pricing.

http://tinyurl.com/7ck3qrd

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