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Microsoft as a monopoly in economics
Microsoft as a monopoly in economics
Microsoft as a monopoly in economics
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Microsoft is one of the most recognisable, profitable and valuable companies in the market today. One of the popular versions of Microsoft windows, Windows Vista, is the topic that will be discussed. Microsoft is referred to as a monopoly in the market because it is a single supplier with exclusive ownership of a unique product (Economics Online, n.d.). Microsoft holds a patent which essentially gives the producer exclusive rights to sell the product and as a result they are able to completely dominate control over the software ‘Vista’. “Patent and copyright laws are easy to see because these laws give one producer monopoly, they lead to higher prices than would occur under competition.” (Gans, King, Stonecash, & Mankiw, 2012, pg. 325). Microsoft can gain substantial profits, and “would be able to derive the greatest monopoly power.” (Economics Online, n.d.).
Markets are constantly changing and whether a business is operating effectively in the market will depend on how they operate with or without market power. A monopolistic, like Microsoft, is free from competitive pressure and should run efficiently to promote growth in the market. Each industry in the market is sectioned into different products or services, and with the impact of globalisation, monopoly power is becoming increasingly hard to gauge and it may not exist at that point in time. (Monopoly and Economic Efficiency, n.d.). This quote is explaining how the market for monopolies is becoming more inefficient and hard to gauge. Monopolies can lead to a less competitive and efficient economy as a result of limited or absent competition. If more firms were to produce vista, the market would become perfectly competitive and efficient because consumers would have a competiti...
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...etween rival computer chips (AMD and Intel) than between rival computer operating systems.
Microsoft is in a monopolistic market where the company is able to derive the greatest monopoly power in setting high prices and high barriers preventing competitors from entering the market. This essay has explored Microsoft and the software ‘vista’ in a monopolistic market, and has been compared to the company in a perfect competition. Competitors for products in a duopoly market and their price competition have also been discussed. The efficiency of the current market Microsoft is and the choices Microsoft would have to make in a perfect market have been investigated. In its current state, Microsoft holds a patent which essentially gives the producer exclusive rights to sell the product and as a result they are able to completely dominate control over the software ‘Vista’.
Since this debate still rages on, many people argue both sides of the story of the pros and cons. Many would argue that not breaking up monopolies actually increase the competition of companies that are attempting to break into some of the market share that the monopoly already has, more so than the free market that exists now. Proponents of the Sherman Anti-Trust act argue that “absolute power corrupts absolutely” (Martin, 1996) as originally quoted by Baron Acton. The idea that no competition within the business world establishes no risk and reward that is all part of the entrepreneur spirit of the U.S. spirit.
United States versus Microsoft Corporation case was a set of combined civil engagements filed against Microsoft relating to the Sherman Antitrust Act by the Department of Justice. In the case, the Department of Justice purported that Microsoft abused monopoly supremacy on PCs in its control of OS sales and web browser software sales (Lohr& Brinkley, 2001). The conflict evolved around the integration of the internet explorer browser software in Microsoft’s Windows OS; a move that was argued to restrict web browser competitors like Opera and Netscape from accessing the browser market. Microsoft argued that it did not have a case to answer and stated the misfortune was the result of the fierce competition and innovation strategies in its industry (Glader, 2006). The following paper aims at analyzing the merits generated from the final settlement of the case and outlines the parties that benefited and those whose interests were harmed.
A monopoly exists when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it. A monopoly sells a good for which there is no close substitute. The absence of substitutes makes the demand for the good relatively inelastic thereby enabling monopolies to extract positive profits. It is this monopolizing of drug and process patents that has consumer advocates up in arms. The granting of exclusive rights to pharmacuetical companies over clinical a...
Microsoft is an American company that was founded by William Henry Gates III, as known as Bill Gates, and his his high school friend Paul Gardner Allen in 1975 April 4. But unluckily, Paul Allen resigned from Microsoft in 1983 after developing Hodgkin’s disease. In 1985 October 20, Microsoft released Microsoft window. It is the first original operating system. It is a graphical extension for MS-DOS. Even though, it’s not handy like nowadays Microsoft window. Then in 1990, Microsoft introduced Microsoft office, which is a bundle office productivity application with Microsoft Word and Microsoft excel. The Microsoft Word was the first application that could display italics. And the Microsoft Office would be available for free for all the PC World’s computer that is produce on that same year in November. In the 2000 February 17, Microsoft released Window 2000 operating system, and according to Microsoft it is the most safe operating system in the world at that time. But still, there are so many problems and glitches need to be fixed. Besides there are mutable computer viruses are made specially to attack Window 2000. Rush to gain back the sales. In the 2001 October 25 Window xp is available. The new operating system fix most of the problem. Although some of the user were still complaining the system that it will take your information, but in the 2007 January, there are 76% of people in the entire world are using the operating system.
Microsoft is currently the largest company in the computer industry. With a market capitalization of $291 billion, Microsoft has built an empire by dominating software sales for personal computers. Stock growth over the past 25 years has increased by more than 30,000%. However, Microsoft’s growth has substantially decreased since the market collapse of 2001(Niemond 25 April 2007).
I believe that Microsoft has the best intensions for society, because they are constantly developing the software market into a more competitive and challenging industry. Microsoft’s success as a company is partly due to its commitment to making the best product possible and strategic business practices. The first reason Microsoft is not a monopoly is because of the standardized quality of its OS. Second is the intelligent business practices Microsoft has engaged in through many of its business partners. The legal issues of the alleged antitrust accusations from the department of justice are just totally overrated.
The free enterprise system is a debatable topic because it allows for competition in the business market, which may or may not work in everyones favor. A good example would be Bill Gates, in which the enterprise system worked successfully for him and helped him become a billionaire. In a free enterprise system, producers decide everything about their products or services, including their prices, ingredients, and what they choose to do with their profits. This also gives freedom to consumers to make their own economical choices. This has allowed businesses to engage in competition, and has been beneficial to many, especially Bill Gates.
Under monopoly one firm has no rivals (Rittenberg and Tregarthen, 2009). On the contrary, in perfect competition many small firms co-exist, none with the power to influence price (Sloman and Sutcliffe, 2001). Equally important, as a combination of monopoly and competition, monopolistic competition represents the market with freedom to enter and many firms competing. However, each firm produces a differentiated product and therefore has some control over its price. Finally, oligopoly exists when few large firms can erect barriers against entry and share a large proportion of the industry. Moreover, firms are aware of their rivals and concerned about their response to competitive challenges (Allen, 1988). Consequently, oligopolies operate under imperfect competition.
Absolute Monopoly - this is what it means! The people who have come up with the idea of protecting the innovation and so called rewards to the innovators never thought that what it may mean to the corporations and how it will kill the innovation in the software industry. As Stallman said “Software patents are a danger that affects all programmers and all computer users. I found out about them of course in working on Free Software because they are a danger to my project as well as to every other software project in the world.[ii]” I truly agree with Stallman’s view of the Patent. Now a day the number of patents is growing exponentially and due to open trade (software specially) internationally the patent law of one country is influencing the law in the other. Country like India where the software industry is growing at a tremendous pace and the US companies generate most of the business, people in India may advocate a law similar to US. Right now the state of the law is much stricter th...
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).
In this paper, team B will discuss the internal and external factors of the Microsoft Corporation. We will explain how these factors affect the four functions of management, planning, organizing, leading, and controlling. Also, we will explain how globalization, technology, innovation, diversity and ethics will be delegated to manage the different factors. Microsoft Corporation was established in 1975 in Albuquerque, New Mexico producing software for developing, manufacturing, licensing, and support for range of software products and service for different type of computing devices. Microsoft grew from six employees to the largest personal computer software company in the world. By 1978, Microsoft earned $500,000 in the first quarter, and by the end of the year they earned revenue of $1,000,000. In the early 1980s Microsoft, in collaboration with IBM they released MS-DOS as their first 16-bit operating system. However after the late 1980s, Microsoft started to build its reputation by creating the Microsoft windows operating system and Microsoft office product, which includes internet explorer, excel, PowerPoint, and word programs. Then in the late 1990s, Microsoft teamed with Sega to incorporated their windows software package into the game developer’s Dreamcast hardware. Also they developed their own gaming system called the Xbox and that eventually was replaced by the xbox360. Microsoft has come a long way and is no longer just a worldwide leader in computer programming but also a major part of the technology world. Microsoft windows have been the flagship and accounts for most of its revenue for Microsoft: but the company has also branched ...
Microsoft’s mission of placing a “PC running Microsoft software on every desk and in every home” drove their overall strategy early on. Depending on the business segment within Microsoft, one would see in place very different business models as the strategy for each line of business could vary. In the operating system (OS) segment, Microsoft initially brought in an existing product and modified this (MS-DOS) to work with the Intel microprocessor, which were the “brains” of the IBM PC. Microsoft partnered with IBM to provide the operating system for the IBM PC. In addition to developing Windows, Microsoft during this period was working to write applications for the Apple OS.
Microsoft is the leading and the largest Software Company in the world. Found by William Gates and Paul Allen in 1975 Microsoft has grown and become a multibillion company in only ten years. It all started with a great vision – “a computer on every desk and every home” - that seemed almost impossible at the time. Now Microsoft has over 44,000 employees in 60 countries, net income of $3.45 billion and revenue of 11.36 billion. Company dramatic growth and success was driven by development and marketing of operational systems and personal productivity applications software.
Monopolies have a tendency to be bad for the economy. Granted, there are some that are a necessity of life such as natural and legal monopolies. However, the article I have chosen to review is “America’s Monopolies are Holding Back the Economy (Lynn, 2017)” and the name speaks for itself.
The intent of this paper is to provide a background of the Microsoft Windows Vista operating system development, including when it was developed, how the development process was management, what needs this specific operating systems was developed to respond to in the Information Technologies market. This paper will also analyze the correlation of Information Technologies and Microsoft's Windows Vista position.