2. Monopoly
Mono One
Polein Seller
• Derived from Two Greek Words
• Market Structure
• Single Seller sells a product
• No close substitute of product
• Barriers to entry of new firms
• Monopolist => full control over market price → „price maker‟
=> searches for price-quantity
combination that will
maximize profit → „price searcher‟
3. • United States Antitrust Law => collection of federal and state government laws
• Regulates conduct and organizations of business
corporations
• Fair competition for the benefit of customers
• Restrict formation of cartels and prohibit other
collusive practices
• Restrict mergers and acquisitions of organizations
• Prohibit creation of monopoly
4.
5. • The Bell Telephone Company was established in 1879
by Alexander Graham Bell
• Bell also established American Telephone and
Telegraph Company in 1885
• Government-Supported Monopoly => High profitable
company
• Lost government backing in 1980s
• Anti-trust regulators split the company in 1982
• Charges were filed against Sherman Antitrust Act
6.
7. • AT&T held monopoly on phone service in US and
Canada
• Through a network of companies called the Bell
System
• April 30, 1907 => Theodore Newton Vail became
President of AT&T
• Believed in superiority of phone system
• Adopted slogan “One Policy, One System, Universal
Service
• Began buying smaller telephone companies,
including western union telegraph
8. • AT&T and the federal government entered into an agreement
known as the Kingsbury Commitment
• It allowed company to continue operating as
monopoly, this state continued until the breakup of
company in 1982
9. • Second time AT&T found itself in antitrust in 1949
• The case began in 1979, it was decided against AT&T on January
8, 1982
• Breakup plan was formalized through out 1983
• Ma Bell was ordered to give up local calling service to small
regional spinoffs, the Baby Bells
• Parent company will hold on to its long distance business and be
allowed to move into computer and Internet businesses
10. • AT&T‟s local operations were split into seven independent
Regional Bell Operating Companies known as “Baby Bells”
• NYNEX => acquired by Bell Atlantic in 1996
• Pacific Telesis => acquired by SBC in 1997
• Ameritech => acquired by SBC in 1999
• Bell Atlantic => merged with GTE in 2000
• Southwestern Bell Corporation => rebranded as SBC
Communications in 1995
• BellSouth => acquired by AT&T Inc. in 2006
• US West => acquired by Qwest in 2000
11.
12. • By 2005 The Baby Bells had merged into 4 Companies:
• SBC Communication
• Verizon
• Bell South
• Qwest
• In 1995 AT&T had divided itself into 3 Companies:
• AT&T
• Lucent
• National Cash Register
• In 2005 AT&T and SBC Communication (Cingular Wireless)
merged as new AT&T
• Finally in 2006, the new AT&T was taken over by Bell South and
became new at&t
13.
14. • Founded by Paul Allen and Bill Gates on April 4, 1975
• Develop and sell BASIC interpreters for Altair 8800.
• Dominated personal computer operating system market with MS-DOS
in mid 1980‟s, followed by Microsoft Windows
• By 1984 Microsoft was one of the most successful software
companies, with $55 million in 1983 sales
15. • In late 1990 Microsoft‟s MS Office
applications had 90% of market
share
• Internet browser had 44% and
server operating system had 55%
of market shares
16. • Adopted pricing policy
that prevents entry of new
players and bundle policy
• Distributing Internet
browser software, IE, free
of cost along with its
windows operating system
17. • Violating 1994 consent
• Abuse of Monopoly Power
• Made misleading statements
and claims
• Unfair Market Strategy
• Extremely large and stable
share of market
18. • In 1997 Microsoft was accused of anti-competitive
marketing practices directed at personal computer
manufactures
• Based on the argument that Internet Explorer and
Windows 95 were 2 self-standing products
• Integrating them into one package => unfair advantage
over Netscape Communication Corporation
• On May 18, 1998 Microsoft released Windows 98 and
another suit was filed
• By the Department of Justice and 20 State Attorney
Generals and the District of Columbia
• Microsoft was accused of engaging in multiple anti-
competitive acts
19.
20. • Affected only for short run
• Settlement defines „middleware‟ to include browser, e-mail clients,
media players etc. and future new middleware developments
• Provide Software developers with the interfaces to interoperate
operating system
• Imposes interoperability b/w Windows and non-Microsoft servers
of the same level
• Prohibited from entering into agreements requiring the exclusive
support or development of certain Microsoft software
• Microsoft‟s OS monopoly continues till date
• The settlement conditions will last for 5 years with a possibility of
2 year extension
