What is a monopoly When one hears the word monopoly, most think of it as the board game or as the controlling of a market. Although the game Monopoly is more of an example of what a monopoly is, it is a great example in explaining the definition. The second way people think of a monopoly is its dictionary definition as the exclusive control of a given commodity or service in a given market. I will not try to explain what the definition of a monopoly is in this paper, but rather explain what components make up a monopoly and how they interact together. I will try and answer the questions on why monopolies exist and their traits that control the business world.
Microsoft is probably one of the first companies that comes to mind when one thinks of a monopoly. I will discuss Microsoft in fairly well detail because I believe that they are a prime example in my dissection of monopoly because of their recent court litigation. I also believe John Rockefeller played an important role in creating a corporate enterprise and he is also considered to be a monopolist by many. I believe monopoly is just a term used for the process of a corporation or person trying to innovate and create standards for the success of their business.
First of all, Microsoft is a technology corporation headed by Bill Gates that produces computer operating systems and software. It was formed in the 1970’s and their objective was to create an operating system so one could run programs on a computer. They began with MS-Dos and eventually developed the Windows line of operating systems. The argument many pose is that Bill Gates created an empire that completely controls the market. However, this is not the whole story.
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Case Summary Microsoft is the world’s largest supplier of computer software. It has dominant market share of PC operating systems with its Windows system. High barriers to entry prevent significant competition in the operating systems market. The primary barrier is that a large number of software programs must be able to interface with any operating system to make it attractive to end users. It ...
Microsoft has created a standard for the computer software industry. Because of these standards, the world has been brought together. People can use their software and have it transferable without having to worry if it will ru on a certain computer. When someone says that they have windows it is widely accepted that anything will run on this operating system if it is Windows compatible. This allows anyone to use the consumer to use the Windows system with confidence and versatility.
For corporations this idea of a standard is very important. It allows them to concentrate on creating one type of software programming medium that will work on any Windows based computer. One example of a negative impact when you do not have standards is chaos. One example where there is chaos is the cellular phone industry.
When this industry began it used about four different standards. Each different company uses a different standard in the operations of their phones. This transfer technology, whether GSM or analog, creates many problems. There is no versatility between most cellular phone networks. Each company has built their own networks and has kept the technology advancements stagnant because of the lack of standards. Microsoft has played a huge part in the advancement of computer technology and the internet because of their ability to create industry-wide standards.
Along with other technology companies like Intel, and other PC manufacturers in the computer technology, there has been an advancement that has been unparalleled since Rockefeller’s oil empire of the early 20 th century. Computers have not only changed the way we work, but our business practices and the way we communicate. Even Michael Dell, founder of the direct selling of PCs to consumer, praises Microsoft and its success. He says, “Microsoft’s biggest impact has been the advocation of a broad standard for personal computing that has been massively accepted and dominates the PC industry around the world. As part of that, they have facilitated applications, which is a self-reinforcing concept. This is a company that has spent a tremendous amount of time assuring that its platform is widely utilized and accepted.
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That foundation has been a key part of the whole growth of the industry from a couple hundred thousand units to over 50 million units [shipped per year].” We should not immediately jump to the conclusion that because Microsoft is extremely successful, something is fundamentally wrong and the company is exploiting others. In a lot of societies a company like Microsoft would be far more appreciated, even treasured for creating a better society. Michael Dell also said, “I am not a strong fan of government involvement in business. I think there are some basic rules the government should write to help structure society, but it should stay out of trying to conduct or regulate businesses. In our transactions with Microsoft, we don’t have any reason to suggest they are acting outside the law.
Our perspective may be different because they are a partner, not a competitor.” It is very interesting that Michael Dell points out his partnership with Microsoft toward creating a utopia of the best products for the consumer. Why is this Another leader in the computer industry sees creating standards and success as a way to improve the market. Another person who is considered an important monopolist and entrepreneur is John D. Rockefeller. He was one of the first people to create an empire in America. At the peak of Standard Oil in 1900, his company controlled 90% of the oil production in North America.
He was able to have his success in a different way than Microsoft. He was able to run the exploration, wells, transportation, processing, and retailing of oil. By doing this he was able to create a monolith that was virtually unbreakable. He controlled virtually every industry related to oil.
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He was successful until the supreme courts convicted Standard Oil from violating the Sherman Antitrust act. The court accused Standard Oil of lowering prices in certain regions so they could buy out the small independent refineries when they could no longer survive and go bankrupt. Clearly, Microsoft controlled a smaller piece of an industry, but how really different are these companies. Standard Oil contributed to the beginning of America’s dependency on oil. Oil has had had such a rapid expansion almost every manufacturing industry depends on oil for the operation and manufacturing of products. How would our cars and airplanes run without electricity Our complete transportation industry would be primitive.
Rockefeller’s monopoly developed the oil industry faster than any other man in his time. He is a true American capitalist and entrepreneur. Without people that are willing to take charge in society we would be primitive. Both Bill Gates and John Rockefeller boosted the economy and society in their technological advancement at a rapid pace with their monopolies. They are true heroes. The most important idea that a monopoly presents is just the ability to succeed in the business world.
Through my two examples of monopolists, I have shown that a monopoly is not necessarily a negative thing. It allows technological and economy advancements that provide society with a fast development of their capitalist environment. A monopoly provides an efficient manner for advancing of the capitalists and individualists views of providing the biggest and best for everyone.
