Software Piracy Cause Of Microsoft Monopoly

MicroSoft has a monopoly because of software piracy. If everyone had to pay, far fewer people would use Windows. Now that MicroSoft HAS a monopoly, they are putting a lot of anti-piracy stuff in WindowsXp to make sure everyone starts paying up.

So when everyone complains that MicroSoft has a monopoly, we should remember that we caused ourselves it by copying Windows ad nauseum.

I just read an estimate that says there are 270 Million installed copies of Windows; only 170 Million of which are paid for. WindowsXp copies are selling for $2.50 in the East. -- MichaelLeach

I met a fellow in a motorcycle gang and he told me that they would all rather be driving Hondas but it was just too hard to get a black market title for a stolen Honda because every model year was different. I'm not sure that this is the same effect, but it has been very good for Harley Davidson.

"Although about three million computers get sold every year in China, people don't pay for the software. Someday they will, though. And as long as they're going to steal it, we want them to steal ours. They'll get sort of addicted, and then we'll somehow figure out how to collect sometime in the next decade." Bill Gates, 1998

Software piracy of competing software also leads to a monopoly. Companies that might otherwise compete with Microsoft on certain fronts never choose to compete, because they know that piracy will rob them of revenue necessary to justify the expenditures on development.

On the other hand, software piracy is not the only factor that makes the software market inefficient. Even if you could magically and inexpensively eliminate software piracy, you still have two other complications. First, software often has pretty small utility for many, many users, so any inefficiencies in the payment mechanism would distort the market, even with perfect honesty. Second, the utility that software provides people often depends on the number of other users (the network effect), but markets don't necessarily have a mechanism to reward users incrementally for increasing the total overall utility of a piece of software.

Capitalism works a lot better with physical resources like bushels of wheat or bins of computer chips, than it does with digital resources like software programs or MP3s.

-- SteveHowell

So, having its products copied gives Microsoft an advantage, but having their products copied gives its competitors a disadvantage? Other factors have to play a very significant role for this to make sense.

Microsoft sells enough copies to stay profitable despite significant piracy; a smaller competitor may not. The smaller competitor will go out of business while Microsoft tries to figure out how to get the pirates to pay.

Yes, digital information is hard to protect. The only answer is encryption, which could prove to be the only method of controlling/protecting your digits. But then there's national security. What a nightmare.

Encryption is not a panacea. The more secure you make your content, the less palatable you make it for consumers (witness the furor over copy-protected compact discs). Also, even if you can come up with an encryption scheme that isn't too intrusive, mathematically-sound methods aren't enough. The CSS encryption standard used on DVDs was broken because of the ineptitude of a single hardware vendor.

To say nothing of the fact that encryption is only useful if you trust the party who will be using it. If you don't, than the best you can do is obfuscate the signal path and hope that they don't have the means to record the end presentation. With typical consumer media, even this is only possible through cartels (assuming that I'm using the right word) and monopolies; some organization that can demand others to co-operate and add yet more devices to extend the signal path (think camcorders + TVs). -- WilliamUnderwood

CategoryMicrosoft