Without addressing the issue of Intellectual Property (IP),
My question is whether Microsoft’s significant market share, which many refer to as a monopoly**, is an indirect result of the size of government?**
The Federal Government is the largest employer in the country. This requires alot of computers running Microsoft software.
In addition to civil service jobs, the Federal Government also utulizes large numbers of contractors.
Relationships between contractors and the government often requires there to be a high degree of software compatibility.
Contractors then have their own relationships with their own subtractors and the effect of the Federal Government’s buying power permeates throughout the economy.
The Military-Industrial Complex could not be what it is without the support of the consumer they sell to - the Federal Government - and the MIC also requires alot of Microsoft’s products.
Many other governments throughout the world also own public sector licences for Microsoft software.
All the monies expropriated from taxpayers in (and from taxpayers throughout the world) which are used to buy Microsoft Software, serve to reinforce the network externalities that maintain Microsoft’s dominate position in the software industry.
If this analysis has merit, Microsoft’s “natural monopoly” in operating systems is really unnatural. The problem is the size of government reinforcing network effects.
Is this analysis flawed? If so how can it be improved? Thanks! - Gary Danelishen
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Sounds plausible to me - I mean, the military-industrial complex thrives because of the government’s existence. Many other industries do too. It wouldn’t be too much of a stretch to include MS amongst these. However, there’s a lot of myth and nonsense surrounding MS, so I’d suggest reading this:
Microsoft is a monopoly – partially for non-government reasons, but yes, mostly from government.
They have continually engaged in anti-competitive behavior, the most egregious of which has been abusing intellectual property law, the most ridiculous of which has been their attempt at trademarking the letter X.
Also, when I say the term “monopoly,” before anyone says, “But wait!!! They don’t have 100% market share!!!” market structures are theoretical abstractions, not absolutes. Even if the mainstream theory of monopolies were true, it’s unlikely for a pure monopoly with 100% market share to ever exist, for a variety of reasons. For one thing, the existence of anti-trust law encourages firms to avoid the appearance of monopoly.
So, the term “monopoly” is used in practice to informally describe a firm that prevents competition, with barriers to entry in the market. The lack of 100% market share is not a valid defense when you’re brought to trial by the FTC.
I agree with a lot of criticism of anti-trust. However, I acknowledge the existence of monopolies and agree that, in the extreme, anti-trust should be pursued.
In the case of Microsoft, I used to think anti-trust was justified because they are clearly a monopoly. But it’s true that if the government simply revoked their patents and trademarks, which they don’t seem to deserve, they would no longer be a monopoly.
If you consider mainstream theories of competition, them we will only have markets without monopoly power when the number of firms in each market is infinite.