A Global Monopoly Power at Work

Microsoft has been in the spot light for years when discussing computer processors. They are a very dominant and well-known company in which the receive millions if not billions of pounds every year. They have experienced almost complete monopoly power when dealing with computer operating systems. In entering so many markets they have and will continue to have dominance in this particular industry. For instance, their Microsoft Office pack has not only brought new consumers into their grasp but has made them do so. Many companies run with Microsoft Word and Excel. A few years ago so many computers had these programmes installed that it would be highly costly to change to a different producer. Another computer company, OS/2 were fighting over supremacy in the desktop and server markets. However, because everyone had Microsoft Office and because it was well integrated into Windows-specific technology, everyone had to choose Microsoft Windows. This eliminated OS/2 from that particular market expanding Microsoft’s rule over the market.

Back in 2005, Microsoft enjoyed an 85% market chare in the global browser market. Integrating the Internet Explorer web browser into the operating system meant to eliminate Netscape from the market. Netscape had been leading this industry and was the first user-friendly way for people to surf the vast information stored on the internet. This dominance was unacceptable for Microsoft so they began to use its market power to extract exclusionary deals with many of the largest PC manufacturers and internet service providers, threatening Netscape customers such as Compaq that if it tried to replace the Internet Explorer icon with the Netscape Navigator icon on its Presario range of computers, Microsoft would withdraw Compaq’s Windows 95 licence. Microsoft’s Internet Explorer has pushed Netscape further out of the market by making their search engine free whereas Netscape continue to charge for its browser. In making the browser free, this enabled Microsoft to capture the majority of the market, making it less profitable for Netscape. Netscape indeed made a loss of $88.3m compared to the profit a year earlier of $8.15m. However, Netscape was bought by America online and they later merged with Time Warner so now arguably they are as influential and powerful in the market as Microsoft.

Microsoft has also upset another part of this market when they introduced Windows Media Player. Apple had their own QuickTime Player and RealNetworks had their RealOne Player. As Microsoft was (are) the computer software giants, this bundle package enabled them to quickly obtain 34.57% of the market share where RealNetworks had only 22.2% and Apple 9.61%. Effectively reducing profits for the other firms, their dominance in one market has allowed dominance in another. Their operating systems account for approximately 90-95% of all operating systems. This method of integrating themselves into similar markets has allowed them to become such a monopoly. They also recently entered the multi-billion-dollar games-console market with the ‘Xbox’. They make so much profit that the fines they get for acting as a monopoly just act as fees. The fines are simply not effective. Microsoft is not going to be stopped until a bigger case is made against them and they fall. Maybe a more damaging punishment is needed. However, it seems unlikely they will as they enter more and more markets in which they stock up huge profits.