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Comment by WalterBright | Hacker News Reader

In my career, first it was IBM, the unstoppable juggernaut that was going to take over the world. Then it was Microsoft, and everyone forgot about IBM. Then it was Apple, and everyone forgot about Microsoft.

Before IBM, it was RCA. Everyone has forgotten about RCA.

It's like in retail. First it's Sears, the unstoppable juggernaut that will take over the world. Then it's Walmart, and Sears is bankrupt. Now it's Amazon, and Walmart is the underdog.

It's almost as if the theory that monopolies inevitably grow to take over the world has serious problems :-)

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I'm not sure I find your examples convincing.

MS still firmly monopolizes desktop OS (over 85% market share there). Sure, that market has lost weight due to the rise of mobile, but last I checked we're all still doing our day jobs on desktop computers, and for most office workers (who aren't developers), that's synonymous with working on a Windows machine. For 20-30 years people have had effectively no freedom to choose their OS and there's no change in sight.

Not sure why you're bringing Apple up since they never really were a monopoly. I don't think their very brief ownership of the smartphone and tablet market counts as a monopoly, that's just called being first to market.

I'm not American so I'm less acquainted with Walmart, but a quick Google search shows their stock isn't nosediving either.

Marketshare != Monopolizing

Microsoft would have to be doing anticompetitive behavior to be monopolizing the desktop market. Things such as forcing OEMs to not allow linux support, or banning iTunes installation on Windows. Simply being popular isn't the same as a monopoly.

Apple has, on the other hand, been monopolizing their iOS devices with the app store. It is the only way to install apps on iOS and Apple has played fast and loose with competitors (like Spotify) in the past: https://www.macrumors.com/2019/06/03/eu-awaiting-apple-respo...

> Microsoft would have to be doing anticompetitive behavior to be monopolizing the desktop market

No. I think the distinction here is important and worth being mindful of.

Whether or not a company is abusing their monopoly position has no bearing on whether or not they are a monopoly. You can't abuse a monopoly position if you aren't a monopoly to begin with, after all.

The distinction is important because in the US it's perfectly legal to be a monopoly. What's illegal is the abuse of your monopoly position.

I think by any fair standard, Microsoft can be considered to have a monopoly in the desktop market, whether or not they're leveraging that monopoly in illegal ways.

Again, simply being dominant in a market _is not_ being a monopoly.

Monopolies are definitively the exclusive control or possession of the supply of the market. Just as a Monopsony is exclusive control or possession of the demand in a market. Microsoft has dominant market position but they do not control the entire supply of OS, hence they are the popular choice but not the exclusive choice.

Whether or not a monopoly is legal or illegal is non sequitur, since it doesn't apply in context here. There are plenty of legal, regional monopolies that benefit consumers from such regulation in utilities, but those are not tech markets.

I'm not sure where you're getting your definitions, but they're not the ones used by the justice department.

"An unlawful monopoly exists when one firm controls the market for a product or service, and it has obtained that market power, not because its product or service is superior to others, but by suppressing competition with anticompetitive conduct." [1]

That's somewhat different from your definition in that it is deliberately open to interpretation (the Sherman Act, for instance, doesn't actually define monopoly) and revolves around anti-competitive conduct rather than exclusive control of supply (which isn't required - ex. Microsoft never had 100% of the OS market, nor did Standard Oil have 100% of the oil market).

[1] https://www.justice.gov/atr/antitrust-laws-and-you

That is because the DOJ website is only interested in defining lawful vs unlawful monopoly, not defining what a monopoly is.

The definition of the word "Monopoly" is already widely denoted as supply side control:

- Wikipedia: The exclusive possession or control of the supply of or trade in a commodity or service. (https://en.wikipedia.org/wiki/Monopoly)

- Investopedia: A monopoly exists when a single entity is the sole provider of a particular asset or service. (https://www.investopedia.com/ask/answers/032415/whats-differ...)

- Oxford Dictionary: The exclusive possession or control of the supply of or trade in a commodity or service. (https://en.oxforddictionaries.com/definition/monopoly)

The definition of the word "Monopoly" is already widely denoted as supply side control:

That's obviously too narrow. Someone controlling the demand side could be just as obnoxious. A company in a company town is in control of the demand side of the labor market, for example.

So you think Oxford Dictionary, Wikipedia, and Investopedia are all too narrow with words?

Control of the demand side of a market is called a Monopsony, not Monopoly. It's mentioned in the thread above, more info here: https://www.investopedia.com/terms/m/monopsony.asp

You are correct, sir! I remember now HN has had this discussion before. However, I think most people would refer to both a Monopsony and Monopoly as the latter.

No, that’s not true. People rarely even consider that there is a special term for being the only buyer or controlling all of the buyers.

I can’t think of any scenarios where people referred to the military as having a monopoly on the missile market. It doesn’t make sense because it doesn’t even make missiles.

I can’t think of any scenarios where people referred to the military as having a monopoly on the missile market.

But Farmers being ravaged by middlemen would use that term about the middlemen buying their crops.

This always comes up - the vocabulary we use in this discussion has been heavily tainted over the years by those who would most benefit by broadening the definition of monopoly. Keep fighting the fight. Precision in language is vital on this front.

Microsoft has a long history of illegal anti-competitive behavior going back decades. I particularly remember an attempt to break Lotus Notes in a service pack that backfired and broke Windows servers.

This was as they were building up Exchange.

You're right, but the victory is pyrrhic. Sure, by the dictionary definition of the word "monopoly", you've got a point, but in the actionable legal sense, you do not, and it's in the legal sense that we're discussing (not all that accurately, admittedly).

Everyone here who isn't talking about semantics is using the word monopoly to mean "abusive monopoly".

I think by any fair standard, Microsoft can be considered to have a monopoly in the desktop market

How? Lots of people I know use Macs, and developers/techie types frequently use Linux.

Windows is the most popular for some types of business, arguably most types, but it doesn't have a monopoly within the desktop space.

They have patents on a lot of stuff. I think cut and paste was one but memory might be off. They use patent suits to suck billions out of Android suppliers. We'd probably have seen that with Windows-compatible desktops like ReactOS if they got mature enough with enough users.

Further, Oracle going for the API ruling means companies like them could monopolize at API level by making ports even riskier and costlier. Then, there's the interface look-and-feel which Apple likes suing over. That's at least three ways they can go after competitors.

> Microsoft would have to be doing anticompetitive behavior

You mean like when they actually did and got caught? I'm not sure I understand your take.

We're talking about now, not 20 years ago when they were fined and forced to change their practices.

Well, I’m that case Microsoft has been monopolizing their XBox’s as well as Nintendo and Sony with their consoles since you can’t buy physical or digital games without the respective owner’s approval.

What does that even mean? Apple is monopolizing their product. Yes, all companies monopolize their own products. That’s the basics of product protection. McDonalds monopolizes their BigMacs and they are miss using that monopoly because you can’t buy a menu that includes Burger Kings Twister fries?

Apple isn’t forced to provide alternative app stores like hacker news isn’t forced to provide third-party plugin support support in their backend, and amazon isn’t forced to allow you to place arbitrary products on their market place. That’s not abuse of monopolies, that’s just having a product and deciding not to be as open some users or nonusers want them to be.

Now if Apple went and told app developers that they will not accept apps that have android versions on the App Store, that would be miss-use of their market position.(and their market position is not a monopoly, there are tons of competitors and Apple only has around 15% market share.)

> It's almost as if the theory that monopolies inevitably grow to take over the world has serious problems.

That's a straw man. No one is saying monopolies are immortal. An economy where monopoly usurps monopoly, one after the other in a continuous cycle is a problem, too.

If you want a real debate, make the case that the world wouldn't be better off if these tech giants were split up like Ma Bell was in the 1950's and forced to compete without the benefits of being able to buy out the first hint of competition. Make the case that we're better off having ONE giant social network, ONE giant online retailer. How often are promising young product or service companies bought out by giant companies just to be left to dry on the vine, no longer a threat to their new owners? Is this what a healthy economy looks like?

> Make the case that we're better off having ONE giant social network, ONE giant online retailer.

That's a straw man. I see no need to assume that a case needs to be made for one or many social networks or online retailers. I understand you think there is one, but I think this is an odd "choice" you believe we are supposed to somehow make as a society through government. Why are we (you) saying we need legislators or courts to decide what the exactly correct number number and size of social networks is? Like it or not, it seems the people have spoken. We want a few large social networks that are owned by publicly traded companies, and many small, esoteric ones very few people have heard about.

> How often are promising young product or service companies bought out by giant companies just to be left to dry on the vine, no longer a threat to their new owners?

They don't have to accept those offers. If they really wanted to "threaten" these companies rather than seeking to be bought, they wouldn't have been bought.

If you had multiple social networks, people would still aggregate toward one. That’s kind of the definition of a network.

> No one is saying monopolies are immortal

But they do! They main complaint about monopolies is that they're impossible to outcompete.

Which holds true for both IBM and Microsoft. Both still hold (virtual) monopolies in their respective markets: Mainframes / desktop OS. It's just that these markets are no longer the most important. That's also the reason the EU antitrust law looks at abusing your current power to get a leg up in a new market (e.g. by manipulating search results to promote your shopping service. One of the many things that got Google in hot water in the EU).

> Both still hold (virtual) monopolies in their respective markets: Mainframes / desktop OS. It's just that these markets are no longer the most important.

That's actually a good point. Thanks!

Of course what's a "market" can be defined in a zillion ways, depending on what point you want to make. It's good to remember that "market" is a theoretical construct, not something tangibly real.

AT&T operated as a monopoly until 1984. Antitrust proceedings started in 1974. It had lots of operating subsidiaries like New York Telephone before that, but they were all the same company and system.

Don't forget AT&T. They became a monopoly, and wiped out everyone else. Whole industries would have probably not arisen if they hadn't been blocked by anti-trust. And then they were split up.

If you have a land line, odds are that your local phone, your long distance service, and your cell carrier are all carried by pieces of AT&T. Pieces that would have reassembled if not blocked by anti-trust. And even if your provider is actually new, they could not have come into existence without rules requiring interoperability.

Some monopolies are "natural", as in once one is established, it is hard to squeeze in on them. For example there is no point to a phone that can't call all the people you want to call. So everyone naturally gravitates to the same network. Most businesses are not natural monopolies. Just because my friends shop at Ralph's doesn't mean that I can't shop at Safeway.

Whether you have a natural monopoly isn't a question of size, it is a question of the unit economics. Retail is a notable example where your advantage as the 800 pound gorilla only goes so far. But technology has many examples where your advantage can be more lasting. (AT&T's decades long monopoly is the best example.)

AT&T and other real monopolies were created by the government.

The government sanctioned AT&T’s monopoly in exchange for building the world’s most capable telecommunications. They’d probably still be the only telecom, if they could have behaved.

At the same time, it was Bell Labs that invented the transistor and other incredibly important things. What would the world have been like without a Bell Labs?

Yes. And then they were prevented from going into computers. Else IBM would have never had a shot.

> It's almost as if the theory that monopolies inevitably grow to take over the world has serious problems :-)

Even if they don't last forever they cause harm while they are around. The theory isn't that monopolies allow companies to last forever but that they prevent competition and harm consumers.

I know that it isn't binart but I can't help but note the irony: if they don't last forever and their demise isn't from obsolescence but a competitor isn't that a statement contradicting preventing competition?

One could be technically more precise and limit prevention to "full effectiveness in all in their domain" or use it loosely enough that simply making one potential competitor unable to set up due to lower margins or investment in efficency is not wrong in a pendantic sense separate from the legal definitions.

> I know that it isn't binart but I can't help but note the irony: if they don't last forever and their demise isn't from obsolescence but a competitor isn't that a statement contradicting preventing competition?

You're right and I also mispoke when I said monopolies cause harm in and of themselves. The issue isn't monopolies but when companies use their position as a monopoly in an anticompetitive way.

> It's almost as if the theory that monopolies inevitably grow to take over the world has serious problems :-)

I'm not sure the sequence of progressively bigger monopolies is a positive thing.

It's almost like many of the very companies you mentioned were subject to antitrust investigations and without antitrust laws hanging above their heads like a sword of Damocles would be free to use their vast fortunes to stamp out any competition that threatened them ^.^

Now it's even worse, we have the FAANG monopoly:

Five monopolies at the same time!!

oligopoly

For both IBM and Microsoft, I would argue that anti-trust cases at least contributed to their fall from the top.

https://www.nytimes.com/1981/02/15/business/us-vsibm.html

https://en.wikipedia.org/wiki/United_States_v._Microsoft_Cor....

IBM's fall happened long after the anti-trust action against them. It's Microsoft that tipped them over, not government regulators, and IBM made one disastrous mistake after another, starting with the PS/2.

While MS was convicted of anti-trust, there wasn't much of any action taken against them. The reasons for them slipping would make for an interesting book.

IBMs fall began with the PC, which they made an open design explicitly because of anti-trust pressures. They lost control of the design and the market on PCs, which led to the rise of, well, most of the market since then. Your comments are wrong enough to be attempts at revision of history.

> IBMs fall began with the PC,

IBM was enormously successful with the PC, so successful that IBM was assumed throughout the 80's that they would continue to utterly dominate the desktop market. (See the humorous 1984 Apple ad for what people thought of IBM and the PC at the time.) Everyone quaked in their boots when a new PC was imminent.

> which they made an open design explicitly because of anti-trust pressures.

I haven't heard that before in histories of the PC I've read. The way I read it was IBM made it open to cut costs and because they didn't think the PC would be a big market.

Additionally, IBM closed the design of the later PS/2 and fenced it in with patents in order to continue dominating the PC market and fend off clones, which contradicts the idea that such behavior would entice anti-trust action.

Do you have a reference for your version?

> which they made an open design explicitly because of anti-trust pressures.

AFAIK, they didn't not, in fact, make it an “open design” intentionally. They published clear specs to encourage peripheral development, which also helped clone makers, but the BIOS was proprietary and had to be reverse engineered by clone makers to be legal. IBM sued several clone makers for infringement (largely for copying rather than reverse engineering the BIOS) and forced them to shutter, which presumably would not have happened if the design was intentionally open.

I suppose it's possible to have a difference of opinion on the meaning of "open". The BIOS was the only bit of the design that IBM had any IP in, and they definitely intended other hardware manufacturers to make compatible products, if not perhaps entire systems.

It's important to remember the regulatory environment that IBM had operated in at the time.

For more than a decade it had been illegal for IBM to exclude 3rd party hardware makers from its mainframe market, beginning with the so-called "plug compatible" peripherals, which resulted in publishing standards for the IBM Channel interface, the prohibition on refusing to allow e.g. 3rd party memory for mainframes, and importantly, the requirement that IBM license its operating systems and software to run on any manufacturer's hardware.

This was the environment that the PC was designed in. The (IMO) open design - which was not an accident - was really the only possibility that IBM had while still holding to those earlier legal restrictions on bundling, tying, and license restriction.

The fact that Compaq could reverse-engineer the BIOS was inevitable given the market opportunity. IBM tried to hold on to that thin reed but it was a doomed effort. As the "PC Compatible" market took off IBM became irrelevant to much of the growth in the industry.

> was really the only possibility that IBM had while still holding to those earlier legal restrictions on bundling, tying, and license restriction.

How does that fit in with the IBM PS/2 design, which was carefully closed?

The PS2 was released in 1987, 5 years after the US antitrust suit against IBM ended, and after IBM no longer had a monopoly position in the PC market.

It was a different era and the horses had left the barn. The PS/2 was a dead end. The original PC architecture, openly evolved, is still generating hundreds of billions in revenue each year - just not for IBM.

I'm still interested in a reference that says the IBM PC being open was a result of anti-trust.

Don't know about IBM, but in case of Microsoft it was some really horrible technical decisions and a lot of internal fights that caused their downfall.

Well, maybe downfall is a harsh word for a company still very successful & profitable...

IBM is still very successful and profitable as well.

Hmm...Microsoft is currently valued at close to a trillion dollars and, AFAIK, the most valuable traded company on earth.

For IBM, I would definitely say that it was primarily incompetence from executives and an overwhelming level of bureaucracy/gridlock that led to its downfall. Microsoft under Steve Balmer was largely the same after Bill left.

The anti trust case had nothing to do with MS losing dominance. It is still dominant on the desktop.

- it lost the browser war because it basically disbanded the team for years

- it lost the mobile market because they tried to do Windows everywhere.

I would say the anti-trust case/ruling has certainly curtailed abusive behavior, though.

The only “abusive” behavior it curtailed was not allowing them to forbid OEMs from installing alternate operating systems - that didn’t make a difference.

It's practice, not just theory. There's a good reason companies are effective at a certain scale and beyond that it's an impending disaster.

I agree, it's bullshit. Not only that, but monopolies are not a bad thing, as long as they are not government granted ones.

What about government granted regulated monopolies like utilities?

A monopoly regulates supply to extract more money from the consumer than a competitive market could. What's the good parts?

They can avoid unnecessary redundant infrastructure as an example. Imagine trying to dig for construction when there are 30 potential cable companies running utilities underground.

That's why utilities like electricity and gas are tightly regulated to protect consumers.

I don't disagree but the movement has been to deregulate these exact examples. A customer can literally buy electricity from a provider one thousand miles away at a cheaper rate if they live in a deregulated area.

But this is only possible because regulators force the local provider to allow the distant provider to use their infrastructure at a fair price.

I don't think that's exactly right. Energy prices are broken down to generation and transmissions costs. The transmission costs remain regulated, but generation can charge a market price.

Regulated transmission prevents other providers from creating redundant infrastructure in a deregulated environment. Deregulation is possible not because of regulated infrastructure but in spite of it. I.e. Deregulation could still exist without regulated transmission but it was deemed to be in the public interest to reduce redundant infrastructure.

Incidentally, the 'public interest' has been one of the claims of moving to a deregulated market, with the thought that this would provide lower utility costs. However, this hasn't always worked out:

https://fuelfix.com/blog/2016/06/08/deregulated-texas-electr...

Theoretical "perfect" competition eats all money that could go toward R&D, by making profits razor-thin. It's an awful way to exist that no sane person who's thought it through actually wants—assuming it could ever exist stably for any length of time, which, probably not.

Going the other direction, monopolies leave the most money available for R&D. Japan famously leveraged the power of a small set of huge players—not monopolies, but very, very far from "perfect competition" markets, certainly—to drive post-WWII R&D, ensuring their continued success by delivering them a captive domestic market while pooling their excess funds with cooperation-encouraging incentives (=more money, from the government) to rapidly improve their tech and productive capabilities, aiming to become an export powerhouse. It worked.

This is not meant to be a defense of monopolies, especially those not firmly under the yoke of government to ensure all that excess is captured in some way for something resembling the public good, but the situation is more complex than one might first think, and whether one may prefer a huge number of market participants or a small number could be very much situational.

> monopolies are not a bad thing, as long as they are not government granted ones.

I disagree. Outside of "natural monopolies", monopolies are bad things whether government-granted or not.

What is a natural monopoly depends on government regulation. In particular regulations granting access from one company's system to another's can stop natural monopolies from being natural monopolies.

A simple example is that the pattern of long thin property rights needed to create a railway system completely blocks anyone from creating criss-crossing railroads that would allow them to compete. But government rules forcing the initial company to allow competitors to cross or share its railways will create competition.

Forced access to long distance telephone networks has the same effect.

No, they are good because they are not forced ones. Like google, anyone could use any other search engine, like I do using duckduckgo. If people use google, it's because they think it's very good and they don't find something that is so much better that they'd leave.

Natural monopolies are just as bad if they exploit their monopoly, which they will certainly do if they’re left to their own devices.

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