Monopoly and Oligopoly Pattern Changes

Monopoly and Oligopoly

Pattern Changes in Industry: The Case of Microsoft

Technology seems to be evolving at a rate that is inconceivable. Much of what we take advantage of in our daily lives is the result of scrutiny and hard work in computer programming. Computer processing and operating systems industries is a complicated genre that has recently undergone dramatic changes in the Microsoft was judged to have broken antitrust laws by a U.S. federal court. In the 1990s, Microsoft clearly dominated the computer operating systems industry (Wilcox 1999). It held the most prominent position within the OS market, and was connected to every new product being launched. Microsoft was one of the first companies to produce an effective and cost-efficient OS system that was incredibly popular within the consumer and business marketplace (Fisher 2000). According to the research "It set about creating nonexclusive standards that allowed anyone to get into the computer hardware business, and fill every market niche. So, Microsoft products were able to be in every market niche," (Fisher 2000). The software products being produced by Microsoft were so universal it became a standard for many desktops being sold at the time. The company dominated the industry by continuously hoarding creative capital and practicing threatening techniques to keep competition low.

Being the first in line, Microsoft has long enjoyed a prominence over the marketplace. According to the research, Microsoft took this top position to an extreme and often used aggressive practices to under the efforts of the competition. Here the research states that "Microsoft has demonstrated that it will use its prodigious market power and immense profits to harm any firm that insist on pursuing initiatives that could intensify competition against one of Microsoft's core products," (Wilcox 1999). Eventually, Microsoft's aggressive practices caught up with the company and U.S. government agencies began investigation accusing Microsoft of violating antitrust regulations.

There has since been removed from a monopoly in computer operating production to marketplace where entry barriers are much lower, and Microsoft has lost the monopoly. The United States government had begun an investigation against Microsoft in 1998 based on its monopolistic practices. Formal charges were eventually filed, and the trial lasted several years. Eventually, the judge presiding over the trial presented his position where Microsoft was guilty of taking action purposely damage competition in protection of its own monopoly. Competitors like Apple, Java, Netscape, and many others had been maliciously denied access into the OS market. In this, Microsoft was ordered to break into two separate entities, one which took care of software programming, and the other to produce operating systems of future computers. In a way, it was important for Microsoft to step away from his powerful vision of the monopoly. Research shows that when organizations are allowed to do this within the context of a monopoly, quality can often suffer. Thus, there was the potential that because "Microsoft no longer has an economic reason to produce a quality product" its quality would have suffered (Fisher 2000). Therefore, the change seen within the market structure Microsoft devotion high quality alive and strong.

Still, there has been a decline of transactional costs in light of a broken up Microsoft. Before the change of business pattern, Microsoft held the monopoly and therefore capitalized on profit margins. Here the research shows that "Microsoft enjoys so much power in the market for Intel compatible PC operating systems that if it wished to exercise his powers solely in terms of price, it could charge a price for Windows substantially above that which could be charged in a competitive market" (Wilcox 1999). However, this trend is not last significantly after Microsoft was supposed to break up due to its violation of antitrust laws. Yet Microsoft never was forced to fully break up, although it significantly had to reduce practices that were associated with its monopolistic position before the judgment. Moreover, Microsoft's stock fell dramatically after the judgment was placed against the organization and the company was forced to cease its aggressive practices to keep down competitors (Kleinbard & Richtmyer 2000). The cost of correlating Microsoft software with every new desktop on the market increased dramatically when Microsoft lost its monopoly. Essentially, competitors were allowed to grab for spots with computer producers, therefore increasing the effort Microsoft had to exhibit in order to keep its presence as primary software provider within the computer marketplace.