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Against Monopoly

defending the right to innovate

Monopolistic Competition

Monopoly corrupts. Absolute monopoly corrupts absolutely.





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Google vs Apple; Is there room for both?

James Kwack writes about the face-off between Google and Apple for control of personal computing, in what at first sight is not germane to the usual subject matter of this blog, but bear with me--in the end, it is about competing monopolies based on different technologies and patents and copyrights link here. In the first of a two part blog series, he describes the evolution of the personal computing and in the second he picks up the appearance of cloud computing and its meaning for the competitive battle. The cloud is Google's realm and the personal computer and associated gadgets like the iPod, iPad, etc. are Apple's. Microsoft is the also-ran in this competition since it seems likely to become increasingly irrelevant to the long-run result.

The key to the Apple strategy is to make the Mac and its spun off gadgets as proprietary as possible, so that owners of the cool gadgets must buy the software which however cannot be used on other makers' hardware, producing a lock-in. Google on the other hand has made the operating system increasingly irrelevant on the PC since it has Windows substitutes in Android and Chrome. While its operating systems are open, its monopoly power derives from its dominance over advertising on the web which it can retain as long as it retains its premier standing in Search software.

On the basis of cost to consumers, it would seem preferable for Google to win this test, but not completely, with the Macs retaining some part of the market based on coolness but at higher prices. In the end, it does not seem quickly apparent that government intervention will provide any consumer benefit, since this industry has fundamental aspects of a natural monopoly, giving the two protagonists a hefty advantage over potential competitors. But each must retain its lead by continuing to innovate.


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