Professor Bainbridge...on law, politics, religion, culture & food

Hmm. Steve, thanks for the points. In your post it seems you think I do not view some of Gates motives with the proper amount of suspicision. Yet the sentence right after your post’s quote states “As I write this post Gates talks of MS’s philanthropy. It is hard to swallow. Many of the press stories about MS show it as purely driven to colonize the world. Gates says there is more to what MS does. Yet maybe as Google rises, Gates really wants to undercut it. Maybe he thinks he can do it with this move.”

In other words, yes, this whole thing could be a ruse. I just think it will be interesting to see where he goes with the ideas. If he is using the idea as you describe, I think the people he relies on may call him out. It may not matter but it could limit that motive. We’ll see.

This is one of those hilarious self-discrediting posts that shows up in the blogosphere from time to time. “Especially monopolists like Bill Gates”?

Apple users of the world, unite! Fight the power!

Well, let us examine the facts: Bill’s dad was a corporate lawyer specializing in patent and intellectual property, Microsoft is basically an example of intellectual property law run amuck, and Bill is the richest man in the world.

What, about capitalism, is there for him to like?

Pot should be legal and software should be free, man!!

Same line of silliness. If Gates is guilty of anything, it’s stating the obvious, badly. Let me remind you - when was the last time you saw a starving IT professional? Never…

business people hate capitalism because they hate competition ?  Really, what fantasy world did you dredge that up from from ?
Thats like saying tennis players hate tennis tournaments, because tournaments mean competition ...
Business people hate to LOSE, not to compete ...  If you had a clue about them you would understand that but obviously you have never actually met any ...
Take your rose colored glasses of long enough to maybe get a real job in a real business and you might get a clue ...

Jeff: Try reading Adam Smith’s Wealth of Nations: “people of the same trade seldom meet together, even for merriment or diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” Seriously, your naivety is almost as amazing as your offensiveness.

I love the Buffet/Gates pairing.

Two guys who love the idea of a death tax, but then proceed to establish foundations that will keep them from falling victim to it.

How do these two complain about how wealthy are taxed, complain about loopholes, and then proceed to take advantage of the system?

absolute hypocrites.

Why does Buffet do it?  Berkshire hathaway’s investors are all elites(not affected by income tax) who support higher marginal tax rates, which hold little sway over their own income.  He is preaching to his investors, not americans.

why does gates do it?  good luck acheiving a monopoly under a free market sytem.  Far easier to do within the confines of socialism, where all those pesky start-up companies never occur for lack of capital.

Obviously your commenters fail to realize that the primary purpose of antitrust law and prohibitions on ‘unfair competition’, at least as that body of law is practiced today, is to use the courts and executive branch as a tool to gain an unfair competitive advantage of one’s competitors.  Perhaps they should get a job in a real antitrust law firm or enforcement agency… I don’t know if *most* business people hate unfettered capitalism with its competition, but I’m reasonably certain that most businesses possessed of “market power” hate competition.  If that’s not the case, then there are a few dozen major law firms whose existence needs to be explained, because there’s no other rational explanation for the existence of big firm private antitrust litigation practices.

Jeff says saying business people hate capitalism because it means competition is like saying tennis players hate tennis tournaments, because tournaments mean competition.

Well, whatever tennis players would hypothetically prefer, business people hate the competitive aspects of capitalism.  At least the objective evidence points that way, the evidence of repeated attempts to stifle competition through friendly regulatory regimes and the like.

Why, for example, do lawyer-regulating bodies prohibit fee-splitting with nonlawyers?  The bar will tell you its about avoiding divided loyalties, but it also conveniently prohibits the likes of Sears and Walmart from providing legal services through staff lawyers.  Absent the fee-splitting prohibition, consumer legal services would likely be dominated by large corporations.  Or so, I suspect, most bar associations fear.

People’s repeated attempts to game competition can hardly be evidence of inordinate love for it.

Perhaps a better analogy then tenis players would be the sclub who just wants to line his wall with trophies.  He doesn’t want competition, he just wants to get the trophy.  The objective of business, as it is ascribed in this post, is not to engage in competition, but to make money (i.e. get the trophy).

Obviously your commenters fail to realize that the primary purpose of antitrust law and prohibitions on ‘unfair competition’, at least as that body of law is practiced today, is to use the courts and executive branch as a tool to gain an unfair competitive advantage of one’s competitors.

Some of us understand this perfectly, which is why we’re laughing uproariously at the Professor terming Bill Gates a “monopolist”. It’s not Microsoft, after all, that’s been using the courts and executive branch as tools to gain an unfair competitive advantage.

This is a silly thesis. Most business people love competition and use whatever tools at their disposal to not lose. (In my experience, most highly competitive people hate losing far more than they like winning.)

One problem is the “Davos effect”: once young billionaires (Bill made most of his billions while quite young) get into do-gooder orbit, they succumb to the desire to be seen as “good” by the “civil society” elites around them.  You see the same thing happening with the Google billionaires and other dot-commers.

In a way, it’s similar to Hollywood: young, impressionable people end up with vast wealth and a vague sense that they don’t really deserve it, so they feel a need to justify the wealth by being seen as “uber-nice” by taking all the “nice person” positions.  And it’s lots easier to be a nice person when you’re advocating a “helping” world, ruled by big government and no nasty competition, than by advocating personal responsibility.

Most business people love competition and use whatever tools at their disposal to not lose.

One of their favorite tools is government. A lot of consumer protection law and industry regulation is not only lobbied for, but written by the corporations. Even Altria (previously Philip Morris) has been at the forefront of calling for FDA regulation of cigarettes.

Jeff said:
“business people hate capitalism because they hate competition?  Really, what fantasy world did you dredge that up from from?
Thats like saying tennis players hate tennis tournaments, because tournaments mean competition”
Spoken like a true undergrad Econ Major.

If business people “love” competition so much, why are they continually squyandering corporate assets on buying up competitors?  I always wondered why so many businesses transferred so much shareholder wealth to investment banking houses to buy up the competing manufacturers, airlines, media companies, what-have-you.  The answer is simple:

Business hates competition.

It’s the explanation that makes everything make sense.  End the competition and Bill Gates’s wealth, at worst, freezes in place.  Not a bad place to be.

RE: Businessmen “hating competition”

This is far too glib. Do some businessmen work to eliminate their competitors? Of course, it’s in their interest—as The Professor points out, even Adam Smith agrees. But as others point out (correctly, imho), they may actually *enjoy* this elimination. So perhaps we can agree that this “hate” is somewhat subjective?

And moving on, the question of whether this attitude is *inherent* in capitalism reflects, to me, a confusion in concepts. A businessman may, of course, “hate competition” but in a capitalist world—ideally a free market—how does he avoid it? Well, the easiest way is to use the best source of force there is ... and I’ll leave it up to you, dear comment reader, to guess what *that* might be.

So don’t tar “capitalism” with what some businessmen are able to accomplish—much less what they “love” and “hate.” What individuals are able to do—especially when backed by force rather than persuasion—is rather a different question than the inherent capabilities of the economic system in which they work.

I’ve been a corporate lawyer for 40 years.  Businessmen “hate” competition and love barriers to entry, especially legal barriers (which cost them no business assets).

...Berkshire hathaway’s investors are all elites(not affected by income tax) who support higher marginal tax rates...

Na, we just like getting annual returns of 20-30%. I pay income tax, and I like lower marginal rates as much as the next guy.

BRK-A is a bit pricey, but a share of BRK-B is within reach of pretty much anyone who’s above the poverty line and is willing to put off getting the next car for a year. All it takes is a bit of self-restraint.

Exactly right, Professor.

The real thesis is that people, whether individuals or grouped into businesses, will tend to marginally use what they can (force, law, deceptions, etc.) to gain advantage over others to profit.

Note this extends to other spheres of social influence, beyond business competition specifically, and noted indirectly by paul.

Haven’t you always wondered why so many members of historically powerful and wealthy families tend towards the left? Think specifically families such as the Rockerfellers, Kennedys, and yes, now the Gateses and Buffetts.

Why do they tend to favor high taxes on income and capital gains and yet moan about the plight of the poor? It is the high marginal tax rates that prevent the capital formation so needed to provide jobs and entrepreneurial opportunities for the poor.

The old moneied people have a huge incentive towards maintaining their own - and their progeny’s, power, wealth, and influence.

By favoring high income taxes and capital gains taxes, etc., they make it hard to accumulate wealth and thereby create hurdles to future competition.

Why, indeed.

It’s no secret that big business partners with government to squash competition through regulations. (Note this is why business has historically relatively accepting of fascism and socialism, wherein businesses gain in many ways state sponsored monopolies.)

It should be no secret that the wealthy have the same incentives to maintain status, wealth, and influence via similar mechanisms.

Don’t knock Bill Gates.

He gave our generation one of it’s most marvellous and beneficial products, at a reasonable price. (I say that as a Mac user).

And if all the rich of the world were as generous and charitable as he, we would all be living in paradise.

The worship of market forces is no more a necessary part of Capitalism than the Chinese Communist Party is. Those who advocate the obnoxious ultra-libertarian philosophy are just another faction of feudal throwbacks trying to hold and fortify the hilltops they have seized, and make the rest of us their serfs.

Capitalism only works to Man’s advantage in free societies, and that freedom demands that ordinary folk have the political freedom to democratically manage their communities, which includes—if the electorate decides—regulating the businesses that operate in them.

"Jeff says saying business people hate capitalism because it means competition is like saying tennis players hate tennis tournaments, because tournaments mean competition.”

Tennis players need a competitor to have a game.  Business people need customers, not competitors, to have their game.  The absence of competitors only makes it easier for them to win their game.  Microsoft essentially has none.  Apple is no threat at all and would have been crushed by now if the fear of more antitrust action were not present.

BC said…
Some of us understand this perfectly, which is why we’re laughing uproariously at the Professor terming Bill Gates a “monopolist”. It’s not Microsoft, after all, that’s been using the courts and executive branch as tools to gain an unfair competitive advantage.

MSFT used their OS monopoly power to force out competitors in the word processing and spreadsheet markets.  They’ve tried to do in the networking and database markets as well, with less success.  They absolutely succeeded in leveraging their monopoly power to force out the competition in the internet access market.

MSFT is the very definition of a monopoly business.

Kip said
“Capitalism only works to Man’s advantage in free societies, and that freedom demands that ordinary folk have the political freedom to democratically manage their communities, which includes—if the electorate decides—regulating the businesses that operate in them.”

Funny, this is just a variation of saying that a nation is not “free” unless it is free to democratically pass oppressive laws.  I seem to recall lefties not liking that when Robert Bork [more or less] said that.  Hell, I didn’t like it either.

The people who claim Bill Gates is not a monopolist are demonstrably wrong.

Microsoft routinely used exclusionary pricing and technical incompatibility to maintain monopoly power in markets for operating system software:

We examine the possibility that Microsoft has used a variety of exclusionary practices, notably nonlinear pricing and technical incompatibility, not to achieve its initial position but rather to retain that position against new competition. We conclude that, under the conditions present in the operating systems market, such practices can be, and in this instance have been, effective in limiting the growth and threatening the existence of entrants and rivals with very small market shares. We also conclude that Microsoft’s anticompetitive behavior has reduced social welfare.

Deven: “it seems you think I do not view some of Gates motives with the proper amount of suspicision”

Gee. Do you think, Deven? What ever gave you that idea?

Could it have been his nascent suspicion of your boot-licking, sniveling sycophancy? That might have had something to do with it.

Any bets on how long it will be before Gates and Buffet join hands with Soros and the three of them start singing “kumbayah”?

Peas in a pod.

If you think businessfolk enjoy competition, you need to refigure your long-term view of the world.

“Funny, this is just a variation of saying that a nation is not “free” unless it is free to democratically pass oppressive laws.”

This - and the frankly quixotic ideal of businessmen and women delighting in competition - is another example of the victory of theory over practice.

Yes, in theory, antitrust laws are “oppressive”. In practice, it is impossible for a population to be free if a few of its members control the rest, whether through “private” or legislative means. As PJ O’Rourke said a la the Supreme Court, “You’d have to be fairly stupid to believe that democracy could be preserved through democratic means.”

"The people who claim Bill Gates is not a monopolist are demonstrably wrong.

Microsoft routinely used exclusionary pricing and technical incompatibility to maintain monopoly power in markets for operating system software:”

I guess my definition of a monopolist is a little outdated. I always thought it was when a producer could do things like raise prices endlessly and the buyer had no alternatives to turn to. Apparently the nuevo definition is that if the pricing for your products isn’t proper in some peoples eyes, that makes you a monopolist too!

Seriously though, I don’t understand how one can claim Microsoft is/was a monopoly with a straight face. Why did they keep their prices within reach of the average consumer? Why did they keep improving their products over time? Could it be that because if they didn’t do those things, someone else would have taken away their market share?

If you would answer no, then please, please explain to me why Microsoft doesn’t just stop improving its products and just sit there and enjoy the trappings of monopoly?

Companies and capitolists do not like competition. Look at every telecom company in the world as a baseline. They are still entrenched in regulating their markets to leverage their customer base. Everywhere. Don’t buy into this? try and open a telecom company and start collecting a marginal customer base and see what occurs?

Business people have selective love/hate relationship with capitalism. For their own business, restraints on capitalism that raise barriers to entry are evil when they are trying to enter, and good after they are inside.  They don’t move to socialist countries (well, actually they’re perfectly happy to sell to socialist countries, as far as I can tell), but they love capitalism and competition driving down the prices of the things they need to buy.

This isn’t just not absurd, it’s pretty obvious.

In any case, I recall Milton Friedman repeatedly making the point that pro-market ≠ pro-business.

Bill Gates donated to George W. Bush in 2004. 

http://www.forbes.com/free_forbes/2004/1011/068a.html?rl04

The people who squeal that ‘Business People Hate Capitalism’ somehow can’t explain why we don’t see Businesspeople moving to Socialist countries.

"Seriously though, I don’t understand how one can claim Microsoft is/was a monopoly with a straight face. Why did they keep their prices within reach of the average consumer? Why did they keep improving their products over time? Could it be that because if they didn’t do those things, someone else would have taken away their market share?

If you would answer no, then please, please explain to me why Microsoft doesn’t just stop improving its products and just sit there and enjoy the trappings of monopoly?”

First, how do you know prices would not be lower than they are now if Microsoft did not use its OS monopoly to dominate word processing, spreadsheets and browsers?

Second, I doubt that anyone can seriously claim Microsoft is “improving” its products once they’ve actually seen Windows Vista (aka Windows Hell), which may single-handledly destroy what is left of the PC gaming indusry—and drive it ino the lap of MS’s XBox 360.

Nope. No abuse of monopoly power here. Nothing to see. Move along.

Is Microsoft really any more of a monopoly than Intel or Cisco or Google?

Or does Microsoft merely attract hatred due to its founder being the world’s richest man, whereas Intel and Cisco’s founders, while still Billionaires, are not at the very top, and hence unknown to most people?

How long before people start rooting for Bill Gates against an ever richer Brin/Page monopolistic duo?

Big business believes in the Divine Right of Business to Make a Profit.

Lose money, and wail to the gov’t. Have to actually think about paying a decent wage, and its cry to the gov’t to let in more illegals.

Actually succeed at making a profit, and they start singing songs about the glories of the free market.  And if someone complains to them about how hard the workers have it, its Free Market, baby!

And thats after illegal immigrants, tax bonuses for building in communities, and a whole host of other advantages not to mention the numero uno advantage of them all----limited liability which in the terms of my Libertarian friends is ‘statism’.

I’m for a free market. I just wonder when I will actually meet one.

Actually, Gates is no longer the world’s richest man.  Thats spot was taken by Mexican telecoms monopolist Carlos Slim earlier this year.

"First, how do you know prices would not be lower than they are now if Microsoft did not use its OS monopoly to dominate word processing, spreadsheets and browsers? “

Er, is there a point to that question? How do you know that prices would be higher than they are now if Microsoft was indeed a monopolist? It’s just a rhetorical dance.

“Second, I doubt that anyone can seriously claim Microsoft is “improving” its products once they’ve actually seen Windows Vista (aka Windows Hell), which may single-handledly destroy what is left of the PC gaming indusry—and drive it ino the lap of MS’s XBox 360.”

Ah I see. Microsoft changed its OS in a way that you don’t like, and that means that they don’t improve any of their products. Additionally, its all a nefarious plot to drive business to its XBox product. And what recourse do you, the hapless consumer, have against such terrifyingly monopolistic behavior? My god, you could.. get a mac! Or a playstation! Or run Linux! You have no options at all!

“Nope. No abuse of monopoly power here. Nothing to see. Move along.”

Hyperbolistic nonsense.

"Er, is there a point to that question? How do you know that prices would be higher than they are now if Microsoft was indeed a monopolist? It’s just a rhetorical dance.”

No more a rhetorical dance than your previous statement, which flies in the face of both logic and economic theory with nothing in the way of fact to back it up.

“Ah I see. Microsoft changed its OS in a way that you don’t like, and that means that they don’t improve any of their products. Additionally, its all a nefarious plot to drive business to its XBox product. And what recourse do you, the hapless consumer, have against such terrifyingly monopolistic behavior? My god, you could.. get a mac! Or a playstation! Or run Linux! You have no options at all!”

You really don’t know much about computers, do you? Change the OS in a way I don’t like? How ‘bout in a way no one likes?  Windows Vista has been rejected by both the IT community and the public at large because it is slow, eats up too many resources, has no backwards compatibility and ridiculous DRM issues, but Microsoft is insistent on ramming it down people’s throats by ending support of Windows XP and forcing computer manufatures to install Vista.  That’s called misuse of monopoly power. They also force 3rd party software providers to bend themselves to Microsoft’s requirements ("certification"), which means—guess what?—that software (particularly games) won’t run on Mac or Linux (or not easily in the case of the latter, and how many consumers have any idea how to run Linux on their computers?) That’s called misuse of monopoly power.

"No more a rhetorical dance than your previous statement, which flies in the face of both logic and economic theory with nothing in the way of fact to back it up.”

Lets try a little thought experiment to clear up my initial statement for you. Lets say Microsoft raises its prices by $500 dollars across the board for its consumer products. If you can give a convincing explanation as to why that won’t cause a large drop in Microsoft’s market share for said consumer products, then I will concede that Microsoft isn’t very subject to market forces and is plausibly a monopolist.  Would an increase of $500 make no difference as to where you put your computer dollars? If not, why not? (Yes, its a setup question. For all your whining, you could easily switch to a different software manufacturer, and you know it. Thus, not a monopoly.)

“You really don’t know much about computers, do you? Change the OS in a way I don’t like? How ‘bout in a way no one likes?”

Heh, excuse me, I didn’t know I was speaking to the grand decider of what constitutes an improvement. My point, which you seem intent on ignoring, is that a monopolist wouldn’t bother to improve its software, or even change it, because it doesn’t have to, and consumers have no alternatives. I agree that Vista isn’t particularly compelling, except perhaps to the granny computers-are-mystifying set, and could even be a step backwards. And if thats the case, then Microsoft will pay for it in lost sales and lost customers. Apple will be the most likely beneficiary. Again, to my mind, in order to plausibly claim that Microsoft is a monopolist, you need to make a convincing case that Microsoft doesn’t need to be concerned about quality, competitors, and pricing. Microsoft should be able to just sit back and let the money roll in without doing anything. As someone who is as plugged in to the computer industry as you imply yourself to be, you know that isn’t true, as much you might hate to admit it. Sorry.

“Microsoft is insistent on ramming it down people’s throats by ending support of Windows XP and forcing computer manufatures to install Vista.  That’s called misuse of monopoly power.”

No Pro, it’s misue of monopoly power if there is *no* alternative. Otherwise its just a company that is making a bad play and overreaching. That is aside from the obvious problem with your thesis being that it isn’t hard to buy a computer that isn’t loaded with microsoft products.

“They also force 3rd party software providers to bend themselves to Microsoft’s requirements ("certification"), which means—guess what?—that software (particularly games) won’t run on Mac or Linux (or not easily in the case of the latter, and how many consumers have any idea how to run Linux on their computers?) That’s called misuse of monopoly power.”

Horrors, that after years of buggy 3rd part software and security vulnerabilities, Microsoft might try to push 3rd parties to meet certain standards in order to reduce those problems.

That part makes me think that it is in fact you who knows very little about computers. Certification does not prevent software from working with windows, anyone can write to the windows API. Certification just means that certified software is less likely to contain viruses, introduce security vulnerabilities, or otherwise do something bad to your system. People who are interested in reducing the incidence of bad software causing problems for them might choose to avoid non certified software. That is a choice they make though, and Microsoft can’t force them to make it.

Software like games does not magically run on multiple platforms without significant portions of them rewritten to support those other platforms. Certification for windows has nothing to do with whether a 3rd party app will run on Mac or Linux. That is entirely up to the 3rd party, and Microsoft can’t change that even if they wanted to.

Come on Pro, I’m still waiting for you to explain to me how there are no alternatives to Microsoft available anywhere.

I had a longer reponse, but it exceeded the allowable length and ate up the response in the process.  I’ll try to be

“Lets try a little thought experiment to clear up my initial statement for you. Lets say Microsoft raises its prices by $500 dollars across the board for its consumer products. If you can give a convincing explanation as to why that won’t cause a large drop in Microsoft’s market share for said consumer products, then I will concede that Microsoft isn’t very subject to market forces and is plausibly a monopolist.  Would an increase of $500 make no difference as to where you put your computer dollars? If not, why not? (Yes, its a setup question. For all your whining, you could easily switch to a different software manufacturer, and you know it. Thus, not a monopoly.)”

Except using your logic, there never has been a monopoly, ever, not even the Standard Oil Trust.  While that may be true in theory, it is not true in practice.  Microsoft has a monopoly in operating systems.  If it raises the price to $500, you don’t have anywhere else to go if you want an OS that actually runs anything, which is after all the raison d’etre of an OS.  But you don’t have to buy a computer.  In that respect, true, Microsoft is not a monopoly.  But if you want or need to buy a computer, you’re pretty much SOL.

“Heh, excuse me, I didn’t know I was speaking to the grand decider of what constitutes an improvement.”

I never said I was.  It was you who said that Microsoft is continually “improving” its products.  If you consider Windows Vista or Office 2007 to be “improvements,” you seem to be in a very, very small minority. 

My point, which you seem intent on ignoring, is that a monopolist wouldn’t bother to improve its software, or even change it, because it doesn’t have to, and consumers have no alternatives. “

You do if your goal is to maintain that monopoly power or to expand it to other areas. Windows was originally an OS, but Microsoft has expanded its vision to be your portal to all things informational and media.  That may be—may be—part of the problem of Windows Vista taking up so much disk space and memory, because Microsoft wants Vista to be your end, not the means to an end, like an OS is supposed to be.

As an aside, there have been high-profile resignations at Microsoft recently over Windows Vista, with some claiming that Microsoft got so arerogant they forgot what the consumer actually wanted.

“No Pro, it’s misue of monopoly power if there is *no* alternative. Otherwise its just a company that is making a bad play and overreaching. That is aside from the obvious problem with your thesis being that it isn’t hard to buy a computer that isn’t loaded with microsoft products.”

No, it is not hard, but those computers don’t run anything.  Mac and Linux are still very, very limited in their software compatibility.  if they don’t run anything anyone wants, and if in the case of Linux it takes considerable computer know-how (which most consumers don’t have) to operate it, then they are not rreally of any value to consumers ass competitin to Windows.

“Horrors, that after years of buggy 3rd part software and security vulnerabilities, Microsoft might try to push 3rd parties to meet certain standards in order to reduce those problems.”

If you say so.  From what I’ve been told by my own IT friends, “certification” involves far, far more than that.  Those certain standards usually serve the interests of Microsoft, not the consumer. Microsoft often ends up demanding changes, which can irretrievably tie the product to Microsoft and make a redesign necessary to run on other OS, which is not cost-effective since those other OS serve so little of the market.

Microsoft have a large share of the OS market (around two thirds, isn’t it?), but Operating Systems are simply a single software component.

A component manufacturer who was the main supplier of a particular important part for the car industry would not normally be described as a monopoly. It’s not unusual for the market for individual components to be dominated by one supplier, and such suppliers can be just as aggravating to their customers as Microsoft.

It trivialises the term Monopoly to label every big software company with it. The software industry as a whole is competitive, fast-changing and diverse; and far from being dominated by any monopoly or cartel.

"It was you who said that Microsoft is continually “improving” its products.”

*Rolls eyes* Ok please allow me to amend my original comment. Microsoft continually *attempts* to improve its products. That doesn’t mean it succeeds. Windows Millenium, for example, is another example of an OS that Microsoft released that was pretty much a step backwards. And it is on the ash heap where it belongs. Whether they succeed in improving their products is not relevant to the question of whether they are a monopoly. Again, my point was simply that a monopolist wouldn’t need to try to improve their products. Do you understand the difference?

“Microsoft has a monopoly in operating systems.  If it raises the price to $500, you don’t have anywhere else to go if you want an OS that actually runs anything, which is after all the raison d’etre of an OS.  But you don’t have to buy a computer.  In that respect, true, Microsoft is not a monopoly.  But if you want or need to buy a computer, you’re pretty much SOL.”

Pro, can you give me an example of something you can do with a Windows box that you can’t do with a Mac box? Or a Linux box if you are a somewhat more advanced user?

“You do if your goal is to maintain that monopoly power or to expand it to other areas.”

Heh, thats kinda funny. You’re an old school monopolist if you sit back on your hands, do nothing, and let the money roll in because you have a structural advantage. But the new school monopolists do crazy things like tinker with their products, trying to tune to the desires of the marketplace, and even do innovative new things sometimes.

I suspect that part of the difference we have comes down to definition though. Your definition of a monopolist seems to be a company that has a large market share of something, regardless of what effort they must undertake to maintain that large market share. My definition is a company with a large market share that can maintain that share and profit from that share without having to do things normal companies have to do to keep customers - (try to) improve their products, (try to) give them more value, fight off competitors.

When I see Microsoft behaving in this fashion, then I could be convinced that they are a monopoly in the big-bad-not-accountable-to-market-forces style. Till then, they are a just a very successful company that has put in a lot of effort to stay that way.

"Microsoft have a large share of the OS market (around two thirds, isn’t it?), but Operating Systems are simply a single software component.

A component manufacturer who was the main supplier of a particular important part for the car industry would not normally be described as a monopoly. It’s not unusual for the market for individual components to be dominated by one supplier, and such suppliers can be just as aggravating to their customers as Microsoft.

It trivialises the term Monopoly to label every big software company with it. The software industry as a whole is competitive, fast-changing and diverse; and far from being dominated by any monopoly or cartel.”

Microsoft’s share of the OS sytem market for PCs is in excess of 90%.  Their share of the OS market for servers was never quite that high, but it had the vast majority of the market.  In recent years, Linux has been moving in on that market and increasing their market share.  That trend is increasing because of the poor performance of Windows Vista and its companion server software.

Using a legal term to accurately describe the market position and behavior of a company is hardly “trivializing” the term.  Again, under that logic, you couldn’t possibly have a true monopoly.  Your contention that it is not unusual one supplier to dominate a market for a component or service (like Halliburton, for example, when it comes to damage to oil wells).  That does not necessarily make it a monopoly per se.  Behavior matters.  Plus, for some products, one could have a natural monopoly.  In Halliburton’s case, there is not a naturally large market for putting out oil well fires.

Individual components, though, are not consumer products.  Your definition of component might be too broad here.  Windoes is arguably a component, but also a consumer product, and no computer can operate without it.  Arguably, an OS is ripe for a natural monopoly.  It standardizes things for consumers and 3rd party software providers.  I do not fault Microsoft for having an OS monopoly.  I fault them for abusing that monopoly to the detriment of consumers.

*Rolls eyes* Ok please allow me to amend my original comment. Microsoft continually *attempts* to improve its products. That doesn’t mean it succeeds. Windows Millenium, for example, is another example of an OS that Microsoft released that was pretty much a step backwards. And it is on the ash heap where it belongs. Whether they succeed in improving their products is not relevant to the question of whether they are a monopoly. Again, my point was simply that a monopolist wouldn’t need to try to improve their products. Do you understand the difference?”

You make a presumption—that Microsoft was trying to actually improve Windows with Vista—that I am not willing to make. 

“Pro, can you give me an example of something you can do with a Windows box that you can’t do with a Mac box? Or a Linux box if you are a somewhat more advanced user?”

Pick a game for PC.  Any game.  Chances are, it won’t work on Linux. (I heard Linux has GREAT solitaire, though.) The document and case managing software we use in my office won’t work in Linux.

“Heh, thats kinda funny. You’re an old school monopolist if you sit back on your hands, do nothing, and let the money roll in because you have a structural advantage. But the new school monopolists do crazy things like tinker with their products, trying to tune to the desires of the marketplace, and even do innovative new things sometimes.”

How was Windows Vista or even Office 2007 an attempt to tune to the desires of the marketplace?  Did we all want DRM on our computers? No, but Microsoft did, to placate the record labels who are angry at Apple for iTunes.  Did we all want streaming audio and video? Yes, we did—and heaven forbid we actually get it from someone other than Microsoft.  So Microsoft tried to pulls an Internet Explorer and embed it in the OS.  The EU is trying to do something about that.  But it begs the question as to why you need streaming audio and video in your OS? Isn’t that the purpose of the software the OS is supposed to run, not the OS itself? Was the public demanding more dialog boxes? A boot-up time longer than a Bill Clinton speech? An ability for Microsoft to watch everything you’re doing on your PC? If it was, I missed it.

After Windows Vista came out, one thing the public did demand was continuation of Windows XP. I’ve lost track of the number of posts I’ve seen that document an “upgrade” from Vista to XP.  So how does this Microsoft trying to stay in tune with the public handle that? By announcing the official death of XP this June.

This is not the behavior of a comoany that cares about what the public wants.  This is behavior of a monopoly, and an exceedingly arrogant one at that.

“I suspect that part of the difference we have comes down to definition though. Your definition of a monopolist seems to be a company that has a large market share of something, regardless of what effort they must undertake to maintain that large market share. My definition is a company with a large market share that can maintain that share and profit from that share without having to do things normal companies have to do to keep customers - (try to) improve their products, (try to) give them more value, fight off competitors.

When I see Microsoft behaving in this fashion, then I could be convinced that they are a monopoly in the big-bad-not-accountable-to-market-forces style. Till then, they are a just a very successful company that has put in a lot of effort to stay that way.”

They are behaving in this fashion, and have so for some time.  Again, Windows Vista.