Well, yes, but that's balanced by the patent system's encouragement of new invention and by the limitation of monopoly to 17 years. It's very hard to start a new company or product line in the face of competition, so the government eliminates your competition for a time. This generally works to the benefit of society, not its harm. Without this barrier to entry, for instance, very few new ideas would get venture capital funding. As for Xerox, note that this a public company and you or anyone else wanting a piece of the action are free to buy its stock.
Patent law encourages both the creation of new companies and continued innovation.
Exceptions can be found, but only a few. What is most common under our system is that industries boom, then shake out until there are 3-5 major competitors in any endeavor, plus a host of small fry that will be bought out if they succeed big time. This is no different for software than for other industries, and we have found it to lead to general prosperity. You might think that Science could get along fine without patents and commercial exploitation, but you'd be wrong. Congress doesn't fund NSF because it loves science, but because it loves technological progress and the resulting taxes, national economic power, and military might.