Microsoft Monopoly Part of Modern

Microsoft Monopoly Part of modern capitalism is, of course, the idea that there is competition in the marketplace. Within any economic system, there are a number of different types of agreements and templates that may be implemented. Some, of course, are legal and encouraged, others illegal and discouraged. For example, in a given marketplace there are ways industries and businesses can approach business competition. Collusion is an agreement that occurs between two entities to limit open competition by deceit or fraud.

Within that same market, if one business or entity dominates the market, a monopoly is reached. This monopoly can be geographic (structured based on geographic criteria -- easier to produce and ship to a given area); a natural monopoly (a firm experiencing increasing returns due to scale relevant to output; technological (technology creates barriers to entry) or even coercive (e.g. A cartel in which the maintenance of the monopoly is done through force) (Schenk, 2010). The purpose of a monopoly is to define and regulate market competition.

In economics, imperfect competition is a situation in a given market where the conditions for perfect competition (equal market power) do not exist. A monopoly implies one major seller of a good or service; an economic/market condition in which there is typically only one large player who "owns" the market. Inside of the individual market there might be small organizations that offer a similar product or service, but the majority of market share is captured by one entity. This makes it quite difficult for newer businesses to enter (Monopoly, 2005).

Microsoft, for instance, was sued in 1998 by the U.S. Government under the Sherman Antitrust Act. The government alleged that Microsoft abused power over Intel-based computers as a monopoly regarding the Operating System and Web Browser. By bundling Internet Explorer with Windows the company virtually owned the PC market. Microsoft contended it was innovation, not monopolization. The Judge found that Microsoft was a monopoly and they had taken robust action to crush Apple, Java, Netscape and others. Microsoft, of course, appealed, hoping the U.S.

Supreme Court would act, but they declined to hear the case. By November 2001 the Department of Justice reached a settlement with Microsoft in which it had to share its application interfaces with others (Department of Justice, 2012). In many ways, Microsoft's point that it was a natural monopoly because of its browser and operating system being the most efficient and cost-effective solution for the market is well taken. Because of the demand for their system, there was a huge economy of scale, making PCs far less expensive.

In addition, many monopolies are deadweight loss to society by taking more than giving -- Microsoft's investment and research/development continue to benefit society, and have, in fact, lowered the demand curve so that more people can afford personal computers. This has advanced the market by allowing the platform to become smaller and more efficient in the use of Smartphones and Tablets (Tutor2U, 2012; McKenzie & Shughart, 1998). Monopolies are not always bad for society, it depends on the product.

For instance, if the cost of production drops as the amount of production increases there is a benefit to the economy of scale and prices are reduced, availability increased, and society benefits. For example, power or gas companies that find excess are able to price based more on market needs than simply a high, monopolistic price. Creating competition might be greater in these cases, because the utilities already have the infrastructure. This also provides standardization in that industry so that ancillary.