Gates & Capitalism

Within conventional American business wisdom, the old saying goes, Build a better mousetrap, and the world will beat a path to your door. Yet, when looking at the recent federal investigation of Microsoft for monopolistic business practices and the history of capitalism in the U.S., it appears that if you build a mousetrap too well, you can expect federal intervention. The monopoly of J.P. Morgan in the banking industry and the monopoly of John D. Rockefeller in the oil industry prove the federal government will take steps to break up a corporation that it fears is a monopoly. Antitrust suits are brought against companies that are thought to have a monopoly in an industry because “the company has such dominance in its industry that it has the power to dictate prices and limit competition” (Shiver and Helm 6). The Justice Department has been investigating the business practices of Microsoft and CEO Bill Gates since 1993, after the Federal Trade Commission had secretly investigated alleged allegation of collusion between the software giant and International Business Machines for two years. One year later the company was forced to sign a consent decree that it could not force those computer manufacturers who license its Windows operating system to also license other software. After bundling its Internet Browser software for free with Windows, companies like Netscape charged unlawful business practi

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g it in Windows…The low-price strategy makes sense on two levels: First, it approximates marginal-cost pricing, since software, once written, costs very little for each additional copy. Anything above that incremental cost, however small, is profit. Second, lower prices mean more customers” (Postrel 2). Thus, far from being against the public interest, this kind of pricing strategy allows many more consumers to purchase computers and computer software. Microsoft has also relied on partners and alliances to build its fortunes, far removed from the charges that it tries to create a monopolistic environment. Microsoft’s operating system can be used on many different types of computers, as opposed to Apple’s working only on Macintosh computers. What this did was allow Microsoft to gain success because it could reap the benefits of innovations from its computer hardware and software alliances. Microsoft, in others words, has a history of being partner-dependent. Innovations in manufacturing, assembly, distribution and applications software were also taken advantage of by Microsoft. As their success grew, so partners became increasingly dependent on them. Microsoft and its partners built up the market, not Microsoft by itsel
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Some common words found in the essay are:
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Approximate Word count = 2855
Approximate Pages = 11 (250 words per page)

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