Microsoft Monopoly Case Study


Speaking about a monopoly I should clarify the concept of monopoly itself. What does it mean? According to Oxford Wordpower dictionary,  ‘Monopoly is a company or an organization that controls the industry’.

So it means a monopolistic (exceptional) activity or right that is concentrated in a certain sphere. As soon as you become the actual owner of market, you acquire possibility to dictate terms and especially price. That is why discounts are no longer needed. So it is rather hard to survive in a fight with a giant. Therefore you are able to hold a high price, ignoring the laws of open market. In addition, you have no need to care about permanent perfection of technology; you do not even need to support quality at former level.

Microsoft Monopoly

One hundred years ago the Federal government decided, that monopolistic predominance at the market harms the user’s interests and a monopoly was obliged to crack on a few shallow companies, many of which exist till today and compete with each other.

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Now the Department of Justice of the USA pays intent attention to a company “Microsoft”, the largest producer of programmatic packages for the personal computers in the world, a so called operating system of the personal computer, as the Department of Justice watches after the observance of antimonopoly laws. In the beginning it was DOS, then Windows, Windows-95 and etc.

On the 20-th of October 1998 the Department of Justice of the USA accused “Microsoft” in infringement of existent agreement between them. It was concluded a few years before and obligated a company to hold back from monopolistic market practice. A Department appealed to the federal court with a request to impose a fine on “Microsoft” of one million dollars daily until the terms of agreement will not be observed.

For a number of reasons, due to a happy coincidence and business shrewdness of the founder and the head of “Microsoft” Bill Gaits, a company obtained an almost complete monopoly at the market of the operating systems for the personal computers. Approximately ninety percents of such computers in the whole world are supplied with one or another version of “Microsoft” system.

Anyway, a monopoly arose up, and for the sake of triumph of open market, finally for the sake of user’s bless, it should be liquidated or at least separated or divided into three parts.

A concrete subject for the present appeal of Ministry of justice to the federal court was the practice of the obligatory Windows setting together with the program of own production, “Internet Explorer” for a navigation in the Internet. This is a direct and undoubted harm of company “Microsoft” to other companies.

A ministry required a company to stop the practice of the obligatory setting of “Explorer” on all computers with the operating system of Windows, and that every user should be advised about a possibility of setting on his computer of other analogical program for his choice.

The rise of “Microsoft” is based on two large mistakes of competitors – companies of IBM and Apple. The first one licensed at “Microsoft” the primitive operating system and did not stipulate for own exclusive rights, supposing that all computer’s force is in iron. The second one advertised the revolutionary computer as machine for family and home use, but not for business. As a result most businessmen staked on the computer of IBM production, and then all more frequent analogical machines of other firms, with the operating system, belonging to “Microsoft”.

Gradually conception of the operating system became more washed out. Besides such main operations, as copying, access to the disks and network, the procedures of repair and disk defragmentation, calculator, calendar and other great deal, disembogued in it.

If to think according to the principles of clean justice, the Department of justice of the USA acted quite correctly. But justice is a quite not synonym of pragmatism and practicality.


Some time or other it becomes obvious in the democratic state, that monopolies are inadmissible. The state which becomes a guarantor a free competition and different developed countries have already accepted such law long ago. At the market presence of sufficient number of competitors puts pressure on prices toward their decline. When the separately taken company proposes a new unique commodity on a sale, it can dictate high prices in certain limits for some time; but as soon as competitors appear, prices fall inevitably, while the classic equilibrium of demand and supply is not reached.

There are no natural monopolies at all, but monopolies are possible if to mean and to take into consideration their not their existence, but their origin. The monopolies in area of energy are most malicious, and their elimination is a debt of every government which is not indifferent to the population well-being. But in area of thin technology, where we deal with patents and professional secrets, the situation can be folded differently.

How to be with a really existent monopoly which is able, not using the forbidden shots, to send any competitor in a knock-out? The most obvious decision would be its dismemberment. Such separation would lie on a border between the operating system and appliqués, so it means to break up “Microsoft” into three parts, Windows, “Explorer” and “Office”. But the user will lose again, because to perfect components – not the same, that to perfect the whole car. It is possible also to decide on a quite unprecedented step, compelling “Microsoft” to promulgate the programmatic code of Windows fully. But such measures are practically impossible to have a legal ground.

According to some calculation a computer loses its price with a speed about 100$ in a year. In other words, if you have a computer, Gaits steals your 100$ every; if you have a lot of computers, it means that every year he drives away your car.


“Microsoft Monopoly”, Internet, available from
“Microsoft Monopoly”, available from
“United States v. Microsoft”, Wikipedia, the free encyclopedia, Internet, available from

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