The Monopoly of Microsoft

The Court concluded that Microsoft was a monopoly because of its exclusive access to Intel-compatible PC's. They concluded that because Microsoft's share of the market was large and stable, and because other companies could not overcome the barrier-to-entry, Microsoft had the power to control prices with monopolistic powers. Of all the operating systems, Microsoft featured a market share of over 80 percent, and that is when one includes Apple computers. The court claimed that since Microsoft did not consult with the market's prices before setting their own prices, and because they raised the prices of their 95 OEM's to the same price as the 98 OEM's shortly before launching the latter product, Microsoft was charging prices that were above-competitive rates ("U.S. vs. Microsoft," 1999). 

This case taught me to think more about monopolies and the extent to which they can control a market. Monopolies are entities that produce a good or service for which no clear substitutes exist ("Economics A-Z Terms", n.d.). Monopolies are exempt from competition unless another gigantic firm can build a competitive productive (Khan Academy, 2019). If those conditions cannot be established, anti-trust laws are designed to break up monopolies and create a more competitive market (Kenton, 2018). This assignment helped me realize what exactly monopolistic powers look like and situations where the government can do something to reign them in. Specifically, it showed me how exclusive rights to work with other producers can create significant barriers-to-industry, even in an industry that features the likes of Apple. This information may help me in the workplace by identifying what areas of a market are controlled by monopolistic powers and which are open to competition. Overall, this type of knowledge will be useful with respect to business decisions and career choices.

References

Economics A-Z terms beginning with M. (n.d.). The Economist. Retrieved from https://www.economist.com/economics-a-to-z/m

Kenton, W. (2018). Monopoly. Retrieved from https://www.investopedia.com/terms/m/monopoly.asp

Khan Academy. (2019) Monopolistic competition and economic profit. [video file]. Retrieved from https://www.khanacademy.org/economics-finance-domain/ap-microeconomics/ap-perfect-competition-topic/modal/v/monopolistic-competition-and-economic-profit

The U.S. vs. Microsoft: Court's findings of fact. (1999). The United States Department of Justice. Retrieved from https://www.justice.gov/atr/us-v-microsoft-courts-findings-fact