Microsoft-opoly: Not a Game

Kel Taylor - May 5, 2000

Being Mac users, most of us would love to see Microsoft chopped up into tiny pieces. However, some dismiss the notion as uncalled for and inappropriate. I believe these opinions are shortsighted and totally oblivious as to what Microsoft can do with its monopoly power.

Having a monopoly doesn't mean that a business is the only choice. It means it controls a vast majority of the market, can set its own prices, and competition in goods or services is difficult or uneconomical. Also, in a monopolized market, new firms are virtually unviable.

While I don't consider the other choice, the Mac, difficult or uneconomical, to the vast majority that's exactly the case.

Think how much it would cost a firm up front to totally convert from Windows to Macs. Firms are forced to continue choosing Microsoft products. They not only have to keep on using Microsoft, they have to pay Microsoft's prices.

In an open market, market forces eventually set prices for goods and services at equilibrium, market forces being demand and supply. Microsoft could charge whatever price it wanted for Windows 2000, and make the next version of Office incompatible with Windows NT, forcing businesses to purchase Windows 2000 at a price just below the cost of converting to a different product - and way above market equilibrium.

This power, whether Microsoft uses it or not, produces situations which will eventually harm consumers. It's not the present we need be concerned about, but the potential of it in the future.

Microsoft has already demonstrated it can use its monopoly in PC operating systems to cripple competition in other fields. Internet Explorer, Microsoft's web browser, was built into Windows 98. This move gave little advantage to consumers or businesses. However, soon after Win98 shipped, Internet Explorer's market share overcame Netscape's, showing that its monopoly of operating systems allows it to enter and dominate another market.

What's next? Microsoft isn't going to stop with web browsers. It has entered the PDA market. Microsoft has engineered the PocketPC system to easily sync with Microsoft Office software. While this will benefit consumers now, it will make PocketPC the obvious "better" choice because of the dominance of Office and Windows, making other choices (such as Palm) more difficult and, soon thereafter, quite possibly nonexistent. I give Microsoft two years to own at least 80% PDA market share if nothing stands in their way.

That's not all they can do. Microsoft could easily build Office into the Windows operating system. Office already has a near monopoly in the business and consumer office software - Word and Excel each account for 94% of their market. Imagine if it was part of Windows.

As computers begin to seep into other appliances, I'm sure Microsoft won't be able to resist. With PDA dominance, it makes perfect sense to have the same system running on everything. Refrigerators, cars, cell phones, televisions - the possibilities are near endless. It's a domino effect. Dominance in one field makes Microsoft's product in another field the better choice, which soon leads to dominance in that field, continuing the cycle.

If unchecked, Microsoft will continue to make itself the first choice of unknowing consumers. If this keeps up for long, Microsoft will become the only choice. It isn't far away, and you unbelievers can keep on unbelieving.

Microsoft used its power to dominate the OS, word processor, spreadsheet, and browser markets. Given the chance, it will do so again in other markets.

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