Question

Bill Gates and Monopoly(Microeconomics)

Please find out what you can on Bill Gates and Microsoft's monopoly. How did it happen, how was it maintained? What was Gate's attitude about it? What was the U.S. government's response? What is your opinion on the matter? Can you think of a similar company right now?

Answer 1

Microsoft initially produced MS-DOS and was a part of the operating systems market and not the computer applications market. It did not enjoy any Monopoly at this stage but when it released Microsoft Windows in 1990 and soon after Excel and Word which replaced the existing applications, it slowly started to gain momentum. ANd soon over 80 per cent computers ran on the Microsoft operating system. This is when it slowly rose to Monopoly status.

In the 90s, when Microsoft's windows was a leading software in computers it bundled its software with its internet browser called Internet explorer which came already installed on the system. (Practices like these were done to maintain the monopoly power it had gained.). This put other browsers such as Netscape at a disadvantage and this practice was seen as an anticompetitive practice with lawsuits filed against Microsoft. Judge Jackson's findings are summarised as follows:

"First, Microsoft possesses monopoly power in the market for Personal Computer (PC) operating systems; Second, Microsoft engaged in a wide-ranging effort to protect its operating system monopoly, utilizing a full array of exclusionary practices; and Third, Microsoft’s actions were harmful to innovation and to consumers."  

(Source: http://www.pff.org/issues-pubs/pops/pop7.4microsoftmonopolyfacts.html)

Many lawsuits were filed by the US govt. against Microsoft to throw light on its anticompetitive practices. A similar company to Microsoft these days would be Google.