Economics is such a dynamic and comprehensive discipline that proposing a new business practice can shake up the entire economic model of a nation, especially in a capitalist community. Although the free market is generally a positive aspect for both the companies and customers, it can promote unethical practices like monopoly.
When we think of the term ‘Monopoly’, the popular board game comes to mind; however, monopoly is not just limited to the living room.Amonopoly is deemed as an exclusive control of an industry by a single entity. This leads to the company gaining control over the economic fundamentals like production, supply, and trade of goods and services within an industry. Unexpectedly, monopolies grant significant benefits to the company; however, they simultaneously make consumers lose their interest in the same company because of a lack of competition. Interestingly, even if a company controls 30% of the market, it can be consideredamonopoly.Usually,monopoliessurfaceinoneofthetwoways,i.e., a larger company strategically conducting business to make small businesses shut down or two rivals merging together, eliminating any competition. The etymology of monopoly is of Latin origins from the word ‘monopolium’, meaning the right of exclusivesale.
This company was established by John D. Rockefeller, also considered the wealthiestAmerican of all time. He established this company in 1870 in Cleveland, Ohio. Since the oil industry is a huge business in the United States, it is safe to think that there would be various competitors in this industry; however, Standard Oil quickly made other companies shut down or go bankrupt, 22 companies of 26 to be exact. Just two years after its incorporation, major oil refineries in Ohio were acquired by Standard Oil.The reign of Standard Oil was immense in the early 20th century, as it controlled 90% of the oil market in the United States. With such profits, Standard Oil led John D. Rockefeller to become the world’s first billionaire. Finally, in 1911, the monopoly of Standard Oil was brought to an end by the Supreme Court of the United States ordering Standard Oil to divide itself into 34 different companies. Eventually, these companies merged with others, introducing thepresent-dayoilcompaniesoftheUnitedStates.
Carnegie Steel Company was the Standard Oil of the steel industry because it controlled nearly 80% of the steel market. It was established byAndrew Carnegie in 1892. Interestingly, this was not the first company established by Andrew Carnegie, as the Edgar Thomson Steel Works, a company that mostly supplied steel to the railways, was also established by him in 1872. Carnegie’s business model was to take over the suppliers of raw materials, then, produce in such large quantities that competitors cannot keep up. This proved to be highly successful, resulting in Carnegie Steel Company controlling 70% of the entire steel production in the United States. Another reason behind the success of the company was its clients’trust in its steel, asAndrew Carnegie had also marketed the quality of its steel in 1893 by setting an example. Using his company’s steel, he erected the Carnegie Building in Pittsburgh, Pennsylvania, which was among the earliest skyscrapers in Pittsburgh. As one can expect, after controlling the market to such an extent, the company was accused of being a monopoly.
Even if you are not a fan of expensive sunglasses, you must have heard the name of Ray-Ban. This, along with other luxury brands like Prada, Ralph Lauren, Versace, Armani Exchange, Chanel, Oliver Peoples, Bulgari, and Burberry rely on the production of their sunglasses by Luxottica, an Italian eyewear company. Interestingly, the mentioned brands are only a few of its clients, which goes to show the sheer control of Luxottica on the eyewear market. Presently, 80% of the eyewear brands rely on Luxottica to design and manufacture glasses for them. It was established by Leonardo Del Vecchio, an Italian businessman, in 1961. While the company was generating nearly $20 billion annually, it merged with Essilor, a French corrective lenses company, in 2017, resulting in $70 billion in annual revenue. This merger gave birth to EssilorLuxottica, and this new company accounts for one-quarter of eyewear salesworldwide.Undoubtedly,competitorshaveaccusedthecompanyofbeing amonopoly;however,nothinghascomeoutofitsofar.
Once a company becomes synonymous with its intended purpose, its competitors are bound to shrink significantly. This is the case with Google. The act of searching for something on the internet is often called googling because of the extensive usage of this search engine. It was established by two computer scientists, Larry Page and Sergey Brin, in 1998. Although Google has humble beginnings, it is presently one of the largest, if not the largest, technology company in the world. Google offers tech solutions for every need, from entertainment to productivity to fitness, with services like YouTube, Gmail, and Fitbit, respectively. Once a company expands to such a size as Google, it is inevitable to find it on the news for unethical practices. For instance, Google has been accused of stealing data from its users, and even signing an agreement with Apple to eliminate any competition. The monopoly of Google is quite evident with 90% of global internet searches being carried out by it. While Google claims to never suppress competition, people don’t trust its business practices. To read more examples of Real Life Monopoly : Click here
