Is Microsoft a monopoly?

Is Microsoft a monopoly?

Summary: Microsoft has lost its appeal against a record $690m fine imposed by the European Commission.

TOPICS: Microsoft

Microsoft has lost its appeal against a record $690m fine imposed by the European Commission.

The European Court of First Instance upheld the ruling that Microsoft had abused its dominant market position.

A probe concluded in 2004 that Microsoft was guilty of freezing out rivals in server software and products such as media players. 

There are about a billion PCs in the tech ecosystem and more than 80% of them run Microsoft operating system.

Four questions:

First, is Microsoft a monopoly?

[poll id=176]

Second, if you think that it is, what should be done about it?

Thirdly, what are your thoughts on the fine imposed?

Finally, what are your thoughts on this:

"A market level of much less than 95 percent would be a way of measuring success," European Competition Commissioner Neelie Kroes told a news conference, referring to the market share of Microsoft's Windows operating system.

"You can't draw a line and say exactly 50 (percent) is correct, but a significant drop in market share is what we would like to see," she said.


Topic: Microsoft

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  • Thoughts on number 4

    Okay, I refrain from most of the comment due to lack of knowledge regarding anti-trust laws. It is hard for me to say "yes (______) is a monopoly" when I am very much aware that they do in fact have competition. I know there's more to it than that, however, for the layperson, that's the confusing part - calling something a monopoly when you can rattle of competition like it's going out of style doesn't sit well with those with a low knowledge of the actual law.

    My problem with #4 is that the EU can't tell a company how much market share they are allowed to have (provided it is in fact shared), because they can't tell that company to stop selling their wares to people who are still buying it. In a continent that is doing this because they want people to have a choice, by limiting the amount of market share they are allowed (and I'd like to know how they propose that MS stop people from buying their product over someone else's....that could be interesting), they are creating an atmosphere that is going to result in people not getting what they want.

    How do they think that the market will just drop down to (as they put) 50% or so? Do they think that a company can just magically say "well, we're going to stop dominating because they told us to." No. The customers are the ones with marketshare control, here. Not the company. If the company is simply providing a good that the customers want, then it is not within their abilities to stop them unless they just stop providing altogether. In addition, in the world of technology, if people want the products, it is very easy to order it from the US or another country and get it shipped to you.

    Perhaps there is a bit left out that explains this thought process further. Because at the moment it really seems like an odd thing to ask for, and something that just CAN'T be asked for with any sense of logic or reason. Instead, it seems extremely fruity - some wishy-washy idea of "all in total fairness." Life isn't fair. The majority of the world purchases MS products. Deal with that. If you don't want them to, then you're going to have to come up with a competition that will actually appeal to others. Who you gonna get? Apple? Well, sounds nice, but there are an awful lot of computer uses that can't afford an Apple computer. Linux? Well, that's not only being tried out by Dell, it's also been available for a long time, for free, and it still hasn't gotten the numbers you're looking for. Perhaps there is another solution that you need to look into, because it seems to me that the problem isn't lack of competition, but rather current lack of interest in that competition, and there's not a whole lot that MS can do about that save write other companies' software for them. Is that what you're wanting? Because that's an odd way reduce a company's marketshare.

    Newsflash Europe - if you keep buying it, then you're not exactly sending the signals you want to send. The only way to get the point across effectively is to STOP BUYING THEIR PRODUCTS. If you can't get your people to do that, then you're not going to see a marketshare reduction. Sorry.
    • Well put

      The reality is simple: as long as people willingly choose to buy their products, then their market dominance is legitimate and guaranteed. They are only a monopoly if they attempt to use their market share to directly prevent competition. Adding a music player doesn't cut it in my book. I have always looked for alternatives to WMP. And since Firefox is not a "small" phenomenon, then IE7 isn't a monopoly either.

      Microsoft may be in the driver's seat due to previous bad behavior, but the past is the past. What are they doing now?
    • Some truth to your post

      But the problem with Microsoft is not that their products are in demand or that they have a monopoly. The problem with Microsoft is that it is using it's dominance in the market to strong arm oem's into not offering alternatives. Until recently, Microsoft threatened all the major oem's with penalties if they offered alternatives to their products. Even now, Microsoft is using it's dominance to lock in proprietary standards to force people to use their products in direct violation of both US and EU regulations.

      Microsoft could very easily adopt true open standards in both multimedia and it's office products but refuses to do so because that would open up competition from competing products in areas they have dominated. It could open up DirectX as a open source standard making it compatible with any operating system but refuses to do so simply because Windows owns the pc gaming market. Lets not forget that they also refuse to open up WMA and WMV so that they could also be used on any platform. They do all of this to lock users in to their products. It is the actions of Microsoft and not their market dominance that has brought this upon them.

      I believe that the best course of action is to either just drop these cases altogether and quit wasting the taxpayers money or to break Microsoft up into two or three different companies. The effect of breaking them up would mean that Windows would no longer be tied to all of Microsoft's other products. You would then be more likely to see Office for example create a port to Linux and be more willing to support open standards. Windows would be forced to support other product if the middleware is no longer a product of the new company formed from the windows division. It would also actually increase the value of the shares of the individual companies because now you have several companies focusing on a few products. This in turn would lead to better products for the consumer. Breaking up Microsoft is a win win for everyone but a few of the upper management of the current company.
      • Links please!

        [i]Until recently, Microsoft threatened all the major oem's with penalties if they offered alternatives to their products.[/i]

        Please provide a link showing that MS threatened Apple unless Apple stopped offering OSX as an alternative to Windows on the Mac.

        And why do only the major OEMs count? Why don't the thousands of local computer stores and even bigger online stores like Tiger Direct who all offer your choice of any OS (or no OS at all) count in your opinion? Is my computer somehow special because it doesn't say Dell or HP on it?

        [i]Microsoft could very easily adopt true open standards in both multimedia and it's office products but refuses to do so because that would open up competition from competing products in areas they have dominated.[/i]

        And Apple could open up iTMS so other MP3 players could play (un)FairPlay protected content. Apple could open up OSX so it could run on Dells. They won't and, in fact, have actively blocked attempts at doing so (see Real). Companies like Apple and MS have their cash cows and have a duty to their shareholders to protect those income streams. As long as alternatives exist (and they do), everything is okay. Keep in mind that Apple has been selling computers with an Apple OS on them [b]longer than MS has been in business[/b]. It isn't MS's fault that Apple is so incredibly incompetent.
        • Obsess much?

          Apple this, Apple that, what is your obsession dude? This story had nothing to do with Apple, the OP didn't mention Apple, you sure seem to eat, sleep, and breathe Apple!!

          snicker, smirk :)
          • No, Apple is a competitor

            The question was: Is MS a monopoly?

            The answer is: No, because Apple offers computers without Windows.

            Unless you now deny that and are willing to state, for the record, that Apple is forced to pay Microsoft for a Windows license on every Mac sold?

            snicker, smirk :)
        • Apple is not a Microsoft OEM

          Apple only commands a little over 2% of the market share for PC's world wide. They are not a major competitor to Microsoft regardless what you want to believe.

          Let me ask you a question? How many Windows PC's does Apple even sell? If you can not make the distinction of the difference between a OEM for Microsoft and Apple, then why should I even bother with providing you links to prove what everyone but you already seems to know is true?

          Apple dominates only one market and that is the MP3 player market. It is not even a close comparison to all the markets Microsoft dominates in the software, gaming and the digital content world.

          There is a huge difference between a major OEM and Tiger Direct. Tiger Direct sells OEM copies for the full going rate to individuals that build their own computers. Dell (for example) preloads the copy of Windows on a pc at a substantially lower price and passes that savings on to customers to remain competitive with other OEM's. Microsoft can not threaten TD in the same way it can a company like Dell to raise the price which would affect Dells bottom line. TD already pays full price for a OEM copy of Windows so their bottom line is not at stake.

          If Apple dominated the PC market the way Microsoft does, then I would suggest their break up also.
          • That's just priceless!!!!

            [i]Let me ask you a question? How many Windows PC's does Apple even sell?[/i]

            So what you are suggesting is that Windows is a monopoly as long as the market is limited to companies that sell Windows? Huh? What? Are you serious?

            Don't worry, you have some pretty good company in making ridiculous statements like that. The DOJ managed to convince a judge that Apple didn't sell home computers because Macs weren't x86 compatible. I guess now that Macs [b]are[/b] x86 compatible, the market needs to be narrowed even further. soonerproud now presents to you the new definition of the desktop computer market:
            - any computer sold with Windows on it

            Using that definition, yes, Windows is a monopoly in the desktop computer market.

            [i]Microsoft can not threaten TD in the same way it can a company like Dell to raise the price which would affect Dells bottom line.[/i]

            Why do you care? The question is: does Microsoft's 90% marketshare hurt the consumer. If you can buy a naked PC from TigerDirect and a Mac from Apple, why do you care about Dell? Dell can choose to sell only Windows and get a discount or they can choose to sell... oh... let's just say... um.... Ubuntu and start paying the full rate for Windows. Oh, Dell [b]does[/b] sell computers with Ubuntu? Oh... damn... there goes your argument!
          • You are just clueless

            Apple is not a competitor to Microsoft. They sell their PC's to a small demographic and are proud to say so. They do not intend to take over the pc market and threaten Microsoft directly. At a little over two percent of the market they are not a threat to Microsoft. In fact it was Microsoft that LOANED Apple the money to continue operations when they nearly went belly up in the 90's.

            Your argument for Dell falls apart since Microsoft was convicted for threating the oems in the very way I previously described. Dell is now selling Ubuntu computers because Microsoft was ORDERED by the courts to stop threating oems with penalties for offering competing products. Dell also now sells AMD processors because Intel stopped threating them with penalties for fear of the same action after AMD filed a lawsuit against Intel.

            What you fail to understand is that Microsoft and Intel both used their market dominance to illegally pressure oem's to not offer competing products.

            And the answer to your question is yes, that Microsoft's 90% marketshare hurts consumers when the consumers are not even aware there is a choice in the market. It stifles innovation and inflates the price consumers pay for a PC.
          • btw

            You need to change your name to Microsoftzealot
      • so i guess what your saying is give your work away for free

        so i guess what your saying is give your work away for free and give there source code away just so microsoft code can be changed so it will work on linux.

        thats kind of a socialist way of looking at things.
        SO.CAL Guy
        • Open source does not mean it has to be free

          Where did I say that Microsoft should give it away for free? Just because something is open source or even GPL does not mean you do not have to charge for it.

          Most open source advocates are not socialist.
      • Why should Microsoft give away...

        ?something that they spent considerable time and money to produce? Microsoft developed DirectX to make Windows the preferred gaming environment in order to sell more Windows, not to help out Linux or anyone else. Why is it a crime to add functionality to your product? Microsoft should be free to add whatever features it wants to Windows without government interference. Microsoft should not be able to strongarm PC manufacturers to force them to offer only their OS, but forcing Microsoft to open source their code, such as DirectX, or remove features, such as IE or MP, is blatantly unfair.

        Adding features is not anticompetitive. If RealPlayer or Netscape wishes to sell or otherwise provide alternatives to IE or MP, then they should produce better alternatives. While most people would be happy with the built in freebies, some of us would be happy to pay for a better browser, or media player, or whatever. Microsoft also includes a basic photo editor in Windows, but that doesn?t stop Adobe or others from selling a better version, and I don?t hear Adobe crying for government intervention . I am tired of hearing about poor RealPlayer and how big, bad Microsoft is putting them out of business. If RealPlayer didn?t produce such crappy software, they might be able to compete better. As it is, they can?t even give away their player. Why is that Microsoft?s fault? FireFox is managing to compete with IE somewhat successfully by offering something more, not by crying for help. Linux is growing market share for the same reason. Isn?t that the way that a free market is supposed to work?
    • you are right you don't understand what is being discussed here...

      there is nothing illegal about being a monopoly... what is illegal is using your monopoly in e.g. OSs to dominate another business like server software or media players, or using your monopoly coerce your customers into action that they would not otherwise do if they had a viable alternative... they law in all modern countries (including they US) recognizes that if monopolies are allowed to abuse their monopolies to stifle competition in other businesses then this is bad for consumers, choice, innovation, the economy etc... MS has already been convicted of doing this in the US..

      so again, there is nothing wrong, illegal, imoral etc with being a monopoly... but when you determined to hold a monopoly you are subject to to follow special rules for the better of the society, economy, consumers, inovation etc...

      if MS had a lower market share they would not be subject to such laws... but i think you an the writer are mistaken.. it's not clear what market the EU official is talking about in the article.. but most certainly not the OS... probably Servers Software maybe Desktop media players since this is what the ruling deals with and logic would dictate that a ruling to un-bundling media players and share server technology would not really affect MSs OS monopoly
      • Did I not say I was only commenting on #4

        I didn't say anything about the monopoly because I don't know the laws.

        I do, however, think that the EC needs to explain how they plan to force a company to diminish it's market share when the market is so clearly controlled by people making purchases.

        Do you have a method? I'd like to hear it. I want to hear how MS is supposed to lose their marketshare without their customers input (meaning that they can't force them to stop purchasing, as that would be imposing to free will).

        It just sounds like a ridiculous thing to ask.

        As for the rest, I don't know enough so I didn't comment. That's all. I didn't ask, either, though thank you for attempting to explain, but frankly, I don't care about alleged monopolies in Europe.
        • you didn't read my post...? and you miss read the article...

          they are most certainly not talking about reducing MS's monopoly in OSs... that wold be ridciulous and probably illegal for the EU to do as well... but reducing their market share media players and more importantly server software..

          and how they do this? by exacly what they were ordered to do, by not allowing MS to bundle MediaPlayer with Windows or to pre-load Windows with all the most popular media players so the user will choose the media player that is actually superior and not just the only one they know exists that came pre-loaded on their machine... or in server software.. by making MS reveal to other sever software producers how to inter-operate with MS's OS... this gives customers real choice and prevents MS from stifling choice and competition..
          • sorry, seems that i misread the article, but Kroes actually misspoke...

            [i] Morningstar analyst Toan Tran was surprised by Kroes' comment. "It's a little disconcerting that a regulator would say something like that, but ultimately people are going to vote with their wallets."


            [b]A spokesman for Kroes later said a fall in market share would be a logical consequence of fairer competition.[/b][/i]

          • I've got a newsflash for you!

            Microsoft indeed was forced to offer a bundle without the media player and other goodies. Guess who bought it? No one! So that should just go to show you that the CONSUMER IS DRIVING MICROSOFT'S SUCCESS.

            What does Linux bundle with its OS? Everything in the kitchen sink! And that includes an Office Suite, media players, backup, etc., etc., etc. And Microsoft still continues to be the #1 OS.

            With the huge success of the Internet, any clueless surfer can easily buy a system WITHOUT WINDOWS but they still continue to buy it WITH Windows.

            And how does the media player arguement get into Server software? Explain please. Especially with Longhorn which will be offered in totally stripped versions.

            Your posts are without base...

            I said it before and I'll say it again. Make a better OS with a must-have unique blow-me-out-of-the-saddle feature and they will install it. Make an OS so compelling that people flock to it. Make an OS that is the gamer's dream platform, and they will come. Until then, long live Windows which delivers.
          • I read your post

            I didn't mean to be short, if I sounded so. I did read your post and it was thoughtful, insightful, and full of relevant to the blog information. However, my point had nothing to do with the laws surrounding or concerning monopolies, or whether MS should have been convicted or not. It was simply that I did not understand how it would be possible to force Microsoft to intentionally decrease its marketshare. Upon reading a follow-up post where that particular line was clarified as a suspected result of the compliance, it makes more sense. However, as it was presented here, it must be admitted that the line is quite inflammatory and perplexing on several levels.

            Thank you for your input.
    • Standard approach

      If Europe doesn't like a non-European product on the market, it
      puts an import tax on it. Make Windows and Office three times
      the price of an Apple and you'll see some shift in the
      market. ;-)

      If Windows gets considerably more expensive then all on a
      sudden hardware sellers will not bundle the PC with the OS
      anymore, or at least advertise with the price for the OS listed
      and make people more aware of what they're paying for.

      It'll work for the corporate world first, IT budgets have their
      limits, and slowly people will use at home the same software as
      they use at work or school. Home users rarely pay for Windows
      or Office anyway, a lot of people know someone who can help
      them with a copy.
      Caesar Tjalbo