Microsoft the Monopoly
May 2000

At the center of the ongoing antitrust trial against the Microsoft Corporation lies the question, "Is Microsoft a monopoly?" When most people think of a monopoly, they envision a person or company with sole control over a particular asset or resource. So, with this definition in mind, the mere existence of an alternative to the particular asset or resource in question, negates the existence of the monopoly state. However, when discussing monopolies, certain accepted ones come to mind, including the public school system, the local cable company, the United States Postal Service, and Standard Oil.

However, are or were these truly monopolies given the above definition? After all, I have the right to send my child to a private school or even perform home schooling. I can watch television using an antenna or a satellite dish. I can transfer a letter using Federal Express or any number of other couriers or even take it myself. Standard Oil's main product was kerosene for lamps, but people easily could have used, and did before kerosene arrived, whale oil and natural gas. After all, the ends are the same. My child gets educated; my television entertains; my letter gets delivered; and my home or business gets lit. So, what makes these accepted examples of monopolies? Simply put, each, at the time, presents not an absence of all alternatives but rather an absence of viable alternatives. Not everyone can afford private schooling or has the time and ability to perform home schooling. Cable has an inifinitely greater number of channel selections than I could ever hope to receive using an antenna, and only now that satellite dishes are smaller than an above-ground swimming pool are they starting to truly compete with the cable industry. Transferring just about anything with Federal Express is distinctly more expensive than the postal service, and I have better things to do with my time than to drive cross-country to deliver a letter. Lastly, whale oil had an offensive smell when burned and caused stains easily, and most people couldn't afford natural gas.

So, how does Microsoft's dominance of the consumer PC operating system market differ from these accepted monopolies? Consider the fact that 89% of children attending elementary and middle schools in the United States attend public school, and this number drops to 78% in college. As of 1996, 89% of subscribers to "multi-channel video distributors" used cable, and that number was falling and didn't include non-subscribers. Standard Oil controlled 90% of the U.S. oil market when brought to trial for antitrust. And, last but not least, over 90% of all personal computers run some version of Windows. So, how does Microsoft differ? Well, it doesn't. Microsoft is as much a monopoly as any of these accepted examples.

People around the world rely on Windows-based applications every day to conduct business, the large majority of which are not available on other platforms. Literally, tens of thousands of applications are available on the Windows platform. The next nearest PC operating system "competitor" can only claim a fraction of that number. You could choose another operating system, but then you are left dealing with a limited number of applications, the increased costs of switching platforms and applications (if not hardware), and limited compatibility. So, while alternatives are available, there exists a distinct absence of viable alternatives. So, Microsoft's dominance bears an incredible likeness to the described accepted monopolies.

In fact, Microsoft's monopoly is not just the same as those depicted above, it is significantly more powerful. The public school system only serves the United States, and there is no concept of education that is available within the public school system that I cannot receive outside of it. A cable monopoly only exists, at best, locally or, at worst, regionally, and there are few to no channels exclusively available on cable as opposed to satellite systems. In fact, satellite systems often offer a much greater number of channels to the subscriber. The postal service is only a monopoly in the United States, and there is nothing that the postal service can ship that can't be shipped by a courier. They just can't deliver it to your mailbox. Even Standard Oil's dominance was restricted to the United States, though the company was looking to extend it globally when brought to trial.

By comparison, Microsoft's dominance extends worldwide, shows no signs of abating, and contains literally thousands of applications that are exclusive to its platform. So, not only is Microsoft a monopoly, at least in comparison to those accepted monopolies we have described, the interconnected global world in which we live has allowed it to become one of the most powerful monopolies the world has ever seen.