The term “Monopoly” strikes many people as one of the most popular board games and still lives up to the name. The idea of the game came into existence around 1902. But the term is used to describe something entirely different that existed since the 1600s. In the context of this essay, Monopoly is defined as a word which is used to describe a company which has the majority market share in its field of operation and is capable of crushing and destroying or buying out the competition to maintain majority market share and continue to exert its dominance in the industry.
Early Monopolies
Numerous monopolies existed in the late 1800s, but one of the names that would echo for the longest was Rockefeller. D. Rockefeller founded the Standard Oil Company in Cleveland, Ohio. Standard Oil gained a monopoly in the Oil industry by buying rival refineries and developing companies to distribute and market its products worldwide. In 1882, these various companies were combined into the Standard Oil Trust, which would control some 90 percent of the US refineries and pipelines. This monopoly ruthlessly crushed its competitors, which refused to join the Trust to keep its market share in the industry for many years. Other names include Andrew Carnegie’s Steel Company and the American Tobacco Company.
When it comes to India, The East India Company was the monopoly in focus. The company filled our history textbooks. By the time India came to its senses about the company having too much control over the country’s business sector and ,in fact, political stuff also, there was endemic corruption. The company was slowly beginning to deteriorate from the inside due to insider corruption. This sped up the process of dissolving it.
Are they legal?
Monopolies are capable of resorting to extreme measures to maintain and grow their market share in the industry. Competing companies would become their foes as the customers now have another choice. This rids the monopolies of the power to operate the company in whichever way they wish to increase revenue. But competition in a market is beneficial to both the customers and the nation as a whole. The competition drives the companies to provide quality goods and services to the customers at a lower price than the competitors. The resulting innovation will strengthen the nation. But monopolies act against this and stifle innovation in the country. Hence in 1890, the US Congress passed the first Antitrust law that would dissolute monopoly companies if they prove to be so. India followed behind with the MRTP Act in 1969. These laws dissolved big names like the Standard Oil Company in 1911 and AT&T in 1984.
Never accept that you are a monopoly!
Renowned entrepreneur Peter Thiel put it perfectly “If you’re a non-monopolist, you will rhetorically describe your market as super small, you’re the only person in that market and If you have a monopoly, you will describe it as super big, and there is lots of competition in it.”. It is ironic, yes. They do this to not appear in the antitrust law radar. Some companies go to many extremes to hide. Amazon higher officials are ordered and trained not to use the phrase “market share” to avoid being questioned on the same. One of the biggest acts of the “don’t appear in the antitrust law’s radar” was by Microsoft. This was back in the day when Macintosh PCs were just too expensive compared to the Windows counterparts, and the latter had greater and better computing tools like the Office Suite. This almost pushed Apple out of the PC business, and Microsoft would have zero competition. But Bill Gates was a smarter man than that. He licensed a deal with Apple by giving them the Office Suite and put them back in business.
Monopolies in the Present Era
Yep, the world’s biggest tech companies started in garages and dorm rooms whose success stories we quote are the present’s monopolies. They comprise Facebook, Google, Amazon, Apple, Microsoft, etc.
In a recent US Congressional hearing that took place on the 29th of July 2020, the CEOs of Facebook, Google, Amazon, and Apple testified about their companies on whether on not they should be considered a monopoly and be dissolved. In the hearing lot of nasty stuff that these companies had done to maintain their monopoly status had surfaced — many with witnesses.
Facebook has been accused of acquiring Instagram to maintain its stronghold in the social media world and copying signature features from Snapchat after Snapchat refused the 3 billion dollars Mark Zuckerberg offered.
Amazon has been accused of bullying sellers into playing by their rules, where they increase the percentage of profits they take and kicking sellers of the site without notice if they refuse to comply. It also apparently plagiarizes products.
Google and Apple have been accused of having unfair policies in their respective app stores towards apps, plagiarizing apps, and taking up large percentages of their profits.
A verdict is expected from the US Congress, which would prove whether the companies mentioned above are monopolies and the necessary action required if they prove to be so.
There isn’t an imminent threat of the existence of a monopoly in India, but there are indeed possible prospects. Namely Reliance, recently it has been expanding immensely with strategic partnerships with the big guys like Facebook, Google, and Microsoft. We will have to wait and see which path the company takes.
Conclusion
Monopolies are a threat to innovation. They possess so much power, which makes them kind of like the kings of their respective industries, brutal kings who decide who lives and who dies in the business world. Of course, every company being the kings in their market is the dream, but misusing the power that comes with it is intolerable. This makes them the villain of the world we are headed towards, an increasingly entrepreneurial one where people don’t sit around and lament about the problems they face and instead head out to solve them. As the famous dialogue goes, “With great power comes great responsibility”.
Antitrust laws and overlooking government entities exist. But often the big guys have ways of finding loopholes and justifying their actions. Small and emerging companies can’t afford to spend capital or time to go against the said monopolies. They would go bankrupt just from the court trials. So regulations have to be more rigid and governing entities must keep a closer eye on the actions and path of the said monopolies.
