Re: Coercive Monopolies in Technical Markets (Intro)

From: Jeff Bone (
Date: Fri Apr 13 2001 - 14:13:42 PDT

Tom WSMF wrote:

> If this is truly a monopoly then we are stating that everyone who uses
> OS's is using MS OSs, therefore is paying MS either in market share,
> money, or combinations of both. If someone or many ones choose to use a
> free os in place of a MS OS then the market share, money, or both that
> should have gone to them is not. The loss is the same wether its going to
> a competitor or staying inthe pockets of the users.

Reasonable argument. Two thoughts.

First thought: the coarse-grained assumption of what we mean when we say
"market" is problematic. There is not one single marketplace for operating
systems but rather several distinct markets. These include the enterprise
desktop market, the consumer desktop market, the engineering desktop market,
the creative desktop market, the enterprise server market, the telecom server
market, the consumer device market, and so on. We can only reasonably ask the
question "is Microsoft a coercive monopoly?" in the context of one of those

The second problem is in the assumption that a monopoly implies 100% market
share in some particular market. Here's a reductio: by that measure, if a
single person in a given market is, say, an irascible old coot refusing to
switch from AmigaOS circa 1987, then MS is not a monopolist. I think we'll all
agree that this shouldn't undermine the validity of the statement that
Microsoft is a monopolist; so the measure of monopoly becomes a matter of
degrees of *something.*

(NB: I've been speaking somewhat vaguely of "networked markets" and "network
monopolies." An operating system is a network of interconnected hardware
devices, software capabilities, applications, etc. I believe there are common
characteristics to all networks --- communications, OS, power, what have you
--- that have an impact on competition.)

IMO, in networked markets, an even better measure of monopolization is the
availability of capital investment to provide new network functionality for
other, competing networks. Tried to get venture money for a Macintosh software
company lately? Good luck. The fact that there are still hold-outs elsewhere
does not mean that MS isn't a monopolist; it just means that some stubborn
elements of our industry refuse to submit at any cost. The reasons,
unfortunately, are usually emotional rather than economic. I think there are
probably good, rational, economic reasons to refuse submission --- and that's
driven my search for a philosophical footing in this general topic for a long,
long time.

> It was not the case that MS won by fear and
> intimidation, if that were the case Apple should have won (see previous
> posts about gold dealers, supoply chains, job rants on the floor, etc).
> Rather MS won by sucking but sucking with good PR.]]

Actually, fear, intimidation, tying, and a general set of tactics originally
designed to compete with / overthrow *IBM* are what won the day for Microsoft.
(This is all pretty well documented by now through popular books on MS and
through the trial records of its various legal challenges.) Should these
things be illegal? Aside from tying, I'd say not, and I'm hard-pressed to
clearly state why tying should be illegal.


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