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Monopoly and Microsoft - Essay Example

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The question of whether or not Microsoft represents a monopoly has long since been settled. With fully 90% of all computers running Microsoft operating systems, the reality of the current market speaks for itself…
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Monopoly and Microsoft
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Download file to see previous pages As will be demonstrated in this brief analytical response, it is the belief of this author that an monopoly, regardless of its shape, size, or form, is ultimately destructive to the market and harmful to the end consumer (Kapoor, 2009). As such, the case of Microsoft and a discussion of economic theory, as well as the behavior that Microsoft has indicated over the past several decades, will be engaged as a means of understanding this particular approach. Furthermore, it is the hope of this author that the reader will come to a more profound level of understanding with respect to the fact that monopolies are ultimately harmful and do not represent a net benefit to the society as a whole (figures 1 and 2 within the appendix of this brief work demonstrate the harm that a monopoly can have with regards to increased prices paid by the end consumer). Monopoly and Microsoft: In understanding the monopoly that Windows has on the user experience of operating a PC, one should not only look to the way in which the firm dominates the operating system itself. Instead, a quick consideration of recent history reveals that Microsoft has long cultivated the monopoly that it now holds (Ohlhausen, 2004). For instance, Microsoft purposefully packaged Internet Explorer within Windows 95 and after as a means of decreasing the market presence and overall level of profitability that Netscape could have in the market (Gisser, 2011). As this was an effective tool towards decreasing competition, and Microsoft soon learned the benefit of packaged software’s ability to further define the market that it had already captured, much the same technique was employed with regards to the audio/video player of Windows Media Player (Vogelstein, 2004). Realizing the a litany of different startups were threatening to take market share from Microsoft, the same strategy of packaging Windows Media Player into the operating system as a means of integrating the product with what can only be described as a captive market (Greene et al. ,2004). As can be firmly noted, the monopolistic model of competition is ultimately harmful to the market and to the consumer. The only entity that benefits from such a model is obviously the producer. As figure 1 and figure 2 both denote, a certain level of deadweight loss is portended by the monopoly. As a graphical representation helps the reader to understand, this deadweight loss is actually stolen from the equilibrium price and demand; thereby making the good under monopolistic competition greatly higher priced than it would be in normal competition. As previously denoted, this in and of itself is engaged by the monopoly seller as a means of incurring further profits. Figure 1: Figure 2: Microsoft’s Approach to Profitability and the Engagement of the Monopoly as a Function of Capitalist Drive Likewise, in seeking to understand the approach that Microsoft has engaged, it can only be defined as one that is bounded by rational self interest in the sense of continuing to accrue further levels of profitability and continue to integrate into further markets (Cohen et al., 1999). Even a cursory review into the current time does not reveal a Microsoft that allows its fate to be pinned upon the success or failure of an operating system; rather, when one looks at the face of Microsoft, one can see a firm that has recently expanded to purchase a controlling ...Download file to see next pagesRead More
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