The Monopoly and It's Impact on Life

Who are thought of as Monopolies?

         Several examples of Monopolies from the past and present include Microsoft, AT&T and the U.S. Postal Service. During the late 1800's and early 1900's there were many businesses and industrial leaders within the United States that tried to reduce competition, thus resulting in federal laws prohibiting against them. In the current case against Microsoft, it is thought that they are a monopoly because of their "bundling" of products that the government says are different products, but Microsoft insists are "integrated." It began when Microsoft released Windows 95 and included their Internet Explorer browser with it for free, while the previously free Netscape Navigator began to bundle it with e-mail and other services for $19, but eventually had to cut their cost to zero again. This caused them to complain to the government, which then led to a lawsuit. From then on Microsoft has been bundling their products along with major system releases that continues to this day. In the current release of Windows XP they included a link in order to get people to sign up for Microsoft Passport, an online validation system as well as MSN Messenger, a direct competitor to AOL Instant Messenger. But more so Microsoft is thought by some to be a monopoly because they are thought to be getting rid of the competition through these shaky dealings with their products. The U.S. Postal Service is also thought to be a monopoly by many, as it is a federal crime to try to ship mail by anyone except the USPS. The USPS is the only handler of first class mail, and thus has a monopoly over that whole aspect of their business.

         Many different companies in the past have been accused of being Monopolies, and when this happens they might be told to stop their monopolistic ways, or are told to break up into separate companies. In the past AT&T was considered a regulated and controlled monopoly of phone service, with Theodore Vail, the president of AT&T, in 1907 thought that the business would work best as a national telephone system. But in 1974 AT&T was said to be limiting long distance service and phone equipment for MCI. The case was solved in 1982 when AT&T agreed to split up their company and in 1984 formed eight different independent regional telephone companies as well as a new AT&T, forcing them now to compete in the open market. The main goals of acts like these were to get rid of plain monopolies that could control everything and limit others, which is understandable, but the effects of it are a little different. AT&T began to lose their main business, which was long distance in 1998, dropping from 90 percent to 50. This led them to buy MediaOne and TCI in order to transform themselves into a communications company. This has not worked though, and has caused them to lose money from it. Now in this time phone companies and others that were broken up usually have to merge together in order to stay profitable. In heated competition prices can only become so low before companies need to band together.

How do Monopolies affect me?


Last Updated January 31, 2002