I would like to point out an interesting correlation between high quality research labs and monopolies:
- AT&T had a monopoly on long distance telephone service for most of the 20th century in the United States. In 1925 AT&T has created Bell Labs, one of the most famous research laboratories in history, the birthplace of transistors, lasers, information theory, Unix, the C language, and many other things.
- IBM was convicted in 1973 for having created a monopoly in the digital computer market. IBM’s research centers have pioneered many fundamental concepts of computer science, engineering, manufacturing, starting with IBM TJ Watson, founded in 1945.
- Xerox signed a consent decree in 1975 to settle an anti-trust suit with the Federal Trade Comission, regarding their monopoly on Xerography. At the time Xerox had just founded the legendary Palo Alto Research Center, or Xerox PARC. You can read about some of the early work done at PARC in my interview with Chuck Thacker.
- In 2001 Microsoft settled a lawsuit with the Department of Justice regarding its monopoly power on operating systems. Currently Microsoft Research is one of most respected research labs in industry. (History will judge whether its influence is comparable to the other three cited above.)
I am not saying that good research only happens at monopolies, there are plenty of other examples. But often monopolies use some of their money for good purposes.
History also teaches us that when the resources of the monopoly start to dwindle, the labs will suffer. Bell Labs was slowly dismantled, Xerox now only partly supports PARC (which has lost Xerox from its name), and many divisions from IBM Research do not enjoy the lavish resources they used to.