Bill Gates’ Legacy of Constructive Monopolism

CEO George F Colony believes Gates’ style of monopoly benefited technology users

June 30 2008 by Fayazuddin A Shirazi


 

Bill Gates, the iconic computing giant formally announced his exit from Microsoft, the organization he co-founded and nurtured to become one of the most powerful IT kingdoms in the world. His departure was duly noted in the media with fanfare. At the same time, critics claim that his company’s chief legacy is one of monopolistic anti-competitive practices.

Not all observers believe Gates’ method of monopoly was bad. “Gates’ monopolistic business practices created a significant benefit for technology users — a set of standards that greatly streamlined communications and work,” says George F Colony, CEO of the Forrester Research, a research company based in Technology Square Cambridge, MA. Colony feels that though Gates’ is known for monopolistic practices, his style of “constructive monopolism” had several positive effects that should be respected.

Writing for his blog Counter Intuitive, George Colony argues that Gates’ ability to make Microsoft’s products global, created de facto world standards for business and consumers, and that this is his single most important legacy. “In creating a standard ecosystem of documents, spreadsheets, printer drivers, programs, browsers, and operating systems, that enabled people to communicate in a single “language,” Gates eased the inherent limitations of computer systems,” he says.

Colony believes monopolies are an essential ingredient in the technology business. It’s only when de facto standards like Windows or de jure standards like HTML become dominant that usefulness soars, he says. “Why? Because the more people that use a technology increases its utility exponentially, not arithmetically,” (sic) Colony observes in his blog commentary.” Colony feels that the constructive monopolism of Gates most closely parallels Thomas Edison’s. “They both created pretty good technologies and then worked, using many means, to get them accepted by more users than their competitors,” he quips.

There’s yet another interesting comparison between Gates and people like Andrew Carnegie, the steel king of yesteryear who was widely reviled for his atrocious wage reforms and was later revered for his huge philanthropic work. “Just like Andrew Carnegie, who today is remembered more for his charitable largesse than his exploits in the steel industry, Gates’ business legacy may fade over time in comparison to his work with the namesake foundation that he set up with his wife Melinda,” says a report published in Computer World.

The Computer World report says that more than the monopoly saga, Gates will be remembered for his contribution to philanthropy. Further quoting Peter Krass, the author of a biography of Carnegie, the report says that the steel magnate’s example likely made a significant impression on Gates’ decision to devote most of his time to philanthropy after retiring from his day-to-day role at Microsoft. “Gates said that he studied Carnegie, and so he has to have read Carnegie’s famous essay on wealth,” Krass said. In that essay, Carnegie concludes: “The man who dies thus riches dies disgraced.” It looks as if Gates is following that Carnegie philosophy closely,” Computer World report quoted Krass, while adding that the Microsoft co-founder is also hewing to Carnegie’s model in another way, by being directly involved with the work done by the Gates Foundation.

Colony who terms Gates as a business innovator, believes Gates had the vision to see the future and he possessed the competitive drive to force his technologies into monopoly positions in the marketplace. In the process if Windows marginalized Apple and the Office bundle pithed Lotus, Borland and WordPerfect, “it wasn’t just bullying,” he says. “Bill’s products were not elegant or particularly innovative — but they were just high quality enough to attract the critical mass of users to get the monopoly rolling,” reiterates Colony.