Can a technological monopoly actually last?


What we should do about monopolies is one of those economic questions that rather starts the catfights. It's possible to point out that monopolies can be (note, can be!) detrimental to the consumer. It's also possible to point out that at least some monopolies get their start, even keep their position, because they're better for the consumer than any of the alternatives.

These arguments have been going on for well over a century. Both sides can use Standard Oil as their example: yes, it did indeed "play" very agressively, deliberately trying to put competitors out of business. It also lowered the cost of kerosene (the major product in those early days) faster than possibly anyone else could have done through its integration of refining technology and transport systems.

Another sort of monopoly, the "trust", or the cooperative oligopoly, can have similar effects. But here the problem is that it is always in the interest of one member to defect, as long as all the others don't. So such conspiratorial monopolies are always unstable. A third type, the "Mafia" monopoly, where you don't defect or you die, that's rather a different matter: but we can put it to one side in a discussion of the legal world, given that the "die" bit is already, or at least causing death to prevent defection, illegal.

Which brings us to the technological monopoly, something that has much exercised minds recently, with especial reference to Microsoft. That just about everyone uses Windows and or Office on their desktop, isn't this detrimental to us all, this monoculture? Certainly we think we can see evidence of rents being piled up in Redmond: on the other hand, perhaps it is the very ubiquity of the Wondows standard that has made computing so cheap for us all, at such benefit to us all?

So do we need to do anything about this technological monopoly? There are intriguing signs that actually, perhaps we don't. For technological monopolies aren't stable either. Have a look here at which operating systems are winning out in the smartphone market. It's Google's Android, by a country mile. Windows is picking up a few scraps here and there but that's all.

Ah, but that's phones, not computers, isn't it? Well, yes, but smartphones are the new disruptive technology, as this photo shows.

And it becomes less insane than you’d think to suggest that Microsoft is in the process of experiencing the fastest and deepest collapse of market share in history, wars and catastrophes aside.

For we're rapidly getting to the point that a smartphone is all the computing power that most of us will need almost all the time. Stick it in a docking station with a keyboard and a screen and certainly one would do everything that I ever do with a computer. The next generation but one or two almost certainly everything you ever do with one too.

Technological monopolies aren't stable because technology isn't stable. So perhaps we don't need to do anything about such technological monopolies? After all, how did the Buggy Whip Trust end up?