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The Circle Bastiat

Who's a monopoly? Microsoft loses market share

To be a true monopoly, a company needs explicit government privilege. Lacking that, we have companies with massive market share...and that changes with time.

By Ryan McMakenGuest blogger / October 29, 2010

Microsoft CEO Steve Ballmer delivers his keynote address at the company's annual Professional Developer’s Conference Oct. 28 in Redmond, Wash. The company is making a push toward supporting programs that run over the Internet, and introduced improved tools to build that kind of program at the conference. They're fighting to keep market share, hardly the actions of a monopoly.

Elaine Thompson / AP

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Microsoft is slowly dying as a consumer brand. As recently as five or six years ago, though, left liberals and other anti-business ideologues were still making comments about how Microsoft was a monopoly that was crushing competition in the market place.

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The less sophisticated of these critiques centered on nothing more than the fact that Microsoft enjoyed huge market share ten years ago. The more sophisticated critiques noted that Microsoft had been successful at expanding market share through agreements with PC providers like Dell who pre-packaged their PCs with Microsoft software.

Anti-IP libertarians have made convincing arguments about patents, but the IP-loving competitors of Microsoft (and the Feds who make IP possible) hardly have a problem with IP.

None of this behavior around bundling products is remotely “monopolist” of course, since there were no real barriers to entry into the market beyond the fact that people really liked Microsoft’s products and weren’t interested in going out of their way to get other products. Linux and Apple’s OS have always been available for purchase and use. People simply didn’t like them as much.

We should mention, of course, that a lot of this anti-Microsoft hysteria came form the early Apple fanbois who saw (and still see) one’s choice of computing products as some kind of moral issue. Thus, the Apple disciples never tired of portraying Microsoft as an evil corporation contrasted with the cute and cuddly people at Apple.

Other competitors of Microsoft resorted to monopolist talk also, and Sun Microsystems, which had been producing far less popular products for many years, sued Microsoft for “anti-competitive behavior.”

Eventually, the federal judiciary sided with Microsoft’s competitors, and federal judges who could not even turn a computer on, started making sweeping judgments about the software industry and computing and forced a variety of reforms in Microsoft’s structure to make it less “monopolistic.”

In spite of all of these efforts by competitors to use the power of the state to crush Microsoft, Microsoft continued for several years to dominate the computing market with both businesses and consumers.

Eventually, however, Microsoft ceased to be inventive and its browser, operating system and platforms either failed to impress, or were never adapted at all to deal with the new realities of modern computing.

The decline of Microsoft simply illustrates what many free market economists had predicted all along. Namely, that Microsoft, never having been a actual monopolist (monopoly only being possible within a framework of government privilege) would some day fade from view as other, more inventive organizations took over Microsoft’s market share.

This happened to IBM, of course. IBM was once denounced as a monpolist, yet today, who could make such a claim without producing smirks in response?

Microsoft’s retreat has little to do with the rent-seeking lawsuits levied against it by Sun and others, but has everything to do with the fact that Microsoft hasn’t produced any interesting or inventive products in years.

With losing market share, Microsoft is no longer the bogeyman of the anti-monpolist crowd. Now it’s Google that is supposedly forcing us all to bend the knee before its monopolist power.

(Better get the federal courts involved, or we’ll all be living in Google-owned company towns within a decade!)

Unless they enjoy government privilege, (as was the case with Pan Am under the Civil Aeronautics Board, for example) these alleged “monpolists” come and go, and these reversals of fortune happen all the more quickly in the fast moving technology world.

The fact that Microsoft now struggles to even keep up with the rapidly-changing computing world illustrates just how unconvincing and short-sighted are the claims or monopoly that are usually little more than an expression of personal opinion and self-interest.

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