Why is Microsoft and Windows a Monopoly?
Microsoft Corporation is one of the biggest technology companies globally, with the majority of its revenue generated from its operating system Microsoft Windows. Microsoft Windows, which was introduced in 1985, has been a significant success story since its launch, with billions of copies sold globally.
However, Microsoft Windows’ growth has been a result of its aggressive business strategies, which have led to it facing backlash for being a monopoly in the industry. But how true is this? And why is Microsoft and Windows considered a monopoly?
What is a Monopoly?
A monopoly is a type of market structure where one company has complete control over the market’s supply and demand. In other words, it provides a single company with the power to exclude competitors or manipulate the market to its advantage.
Monopoly power can be achieved through different means such as mergers, acquisitions, and competition elimination. Monopolies have been viewed as negative for the economy because they limit competition, leading to the lack of innovation and higher prices for consumers.
Why is Microsoft a Monopoly?
Microsoft’s dominance began to come to light in the 1990s when it was accused of various anti-competitive practices that gave it an unfair advantage over its competitors. The US government also filed an antitrust lawsuit against Microsoft in 1998, alleging that Microsoft was using its monopoly power for anti-competitive purposes.
The US Department of Justice alleged that Microsoft was bundling its operating system with its internet browser, Internet Explorer, and refusing to allow computer manufacturers to install another browser. This move made it difficult for competitors such as Netscape Navigator to compete with Microsoft, and it eventually led to the decline of the browser.
Microsoft was also accused of making a deal with computer manufacturers whereby it would be the only operating system pre-installed on computers. With most consumers choosing to stick with the preinstalled software, this deal meant that competitors had little to no chance of penetrating the market, thus further strengthening Microsoft’s monopoly power.
Microsoft’s Impact on Competition
Microsoft’s intense monopoly power has given it the ability to limit competition and slow down the pace of innovation. A notable example of this is Internet Explorer.
When Microsoft bundled its internet browser with its operating system Windows, it became difficult for competitors to get their browser on computers. This further led to a lack of innovation in the browser industry, leaving Internet Explorer as the dominant browser for years.
Another example is the database software industry, where Microsoft used its monopoly power to deter competition. The government’s antitrust lawsuit against Microsoft revealed that the company had previously attempted to pressure Intuit into changing a deal with a competitor to Microsoft’s own database.
The Future of Microsoft’s Monopoly
Although Microsoft has been accused of being a monopoly in the past, its power has been debatable in recent times. This is due to the emergence of new technology firms such as Apple, Google, and Facebook, which have provided competition in the market.
Microsoft has also since settled the antitrust lawsuit against it and embraced an open-source approach to developing its software. This move has allowed other developers to contribute to its development, particularly on its cloud computing platform, Azure.
Despite the newfound competition and openness, Microsoft’s stronghold in the operating system market remains unshakeable. Windows still holds a dominant position in the market, with its current version, Windows 10, running on over a billion devices.
In conclusion, Microsoft and Windows’ monopoly power was due to the company’s past anti-competitive practices, particularly between the 1980s and 1990s. The government lawsuit against the company further exposed its tactics to limit competition.
While Microsoft has adopted a more open approach to development, and new technology companies have emerged as competitors, its stronghold in the operating system market remains undeniable. The future holds the possibility of a shift in power, but for now, Microsoft remains a monopoly in the industry.