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Monopolies are natural, but not legal

"No monopoly can exist unless you use physical force or regulation to make it so."

This is an incredibly stupid statement. Monopolies are a natural outgrowth of the free market and the only reason we don't see more of them is that we have laws that regulate and prevent them. A free market economy rewards size and success with even more size and success and without anti-trust laws, we would all be getting everything from food to clothing to computers from two or three giant corporations.

Microsoft combined market savvy with luck to become the one and only operating system on what was then already a monopoly in "open architecture" PCs - the IBM PC. Then they used a series of licensing tactics and strong-arm marketing programs to ensure that their other products - namely Office - were distributed over their competition. This was all marginally legal until they reached a monopoly position in the market - sometime well in advance of the introduction of Windows 95.

No one has to hold a gun to somone's head to get them to buy a monopoly product - most consumers are unaware and unconcerned over the monopoly status of the companies they buy from. And there does not need to be a complete lack of alternatives to still be a monopoly. Monopolies are defined by their ability to influence "normal" market forces (i.e. manipulate prices, prevent competition from entering the market, control channels of distribution, etc.), not by a complete lack of competition.

Linux provides an important alternative to Microsoft in the market of "open architecture" computers (generally referred to as "PCs"). Because of Microsoft's monopoly, Linux has risen as the alternative particularly because it is Free Software and therefore not influenced by Microsoft's ability to manipulate prices. However, Microsoft still controls much of the distribution channel and will continue to leverage its huge assets (mostly derived from its years of monopoly pricing) to undermine Linux. It also controls several de facto standards that act as key "choke points" for the competition (Office file formats, Exchange email/calendar interfaces, Active Directory authentication certificates, IE specific extensions to HTTP/HTML, .NET Data Object interfaces, etc.).

The key to Linux success is in overcoming Microsoft's non-pricing related monopoly power.

Posted by: psuedostratified   Posted on: 02/15/05 You are currently: a Guest | Members login | Terms of Use

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