Sunday 1 August 2010

IBM v EU

Just as IBM was basking in the success of its zEnterprise mainframe-in-a-box, along comes the European Union regulators to take it to task for not allowing its operating system to run on other hardware, and not being fair to spare-part vendors.

The European Commission has already warmed up for its probe into IBM’s workings by taking action against Intel and Microsoft. EU antitrust laws ensure that big organizations deal carefully with small competitors. The EU can issue a range of fines and sanctions should it believe a dominant organization in the market place is abusing its position. IBM’s legal team are used to this kind of battle. Back in 1956 the US Department of Justice reached a consent decree with IBM that, in effect, created a market for used mainframes and mainframe parts. In 1984 the EU agreed with IBM that competing mainframe companies would have access to the mainframe platform.

As we’ve mentioned before, the first complaint comes from T3 and TurboHercules saying that IBM ties its mainframe operating system to its mainframe hardware – and thereby destroys the emulation market. The second investigation was initiated by the Commission alleging discriminatory behaviour towards competing suppliers of maintenance services – spare parts to you and I.

How does IBM respond? The company said that it intends to cooperate with any EU inquiries, while denying there was any merit to the complainants’ claims. It then alleged that the accusations were being fuelled by business rivals. Microsoft is a minority stakeholder in T3. IBM went on to suggest some of its larger competitors want “to mimic aspects of IBM mainframes without making the substantial investments IBM has made and continues to make”. IBM declared these competitors, “are violating IBM’s intellectual property rights”. It continued: “IBM is fully entitled to enforce its intellectual property rights and protect the investments we have made in our technologies”.

It will be interesting to see what comes out this. Bear in mind there’s the NEON zPrime case waiting in the wings as well.

In its on-going watch on successful companies, the Commission has also launched a preliminary anti-monopoly investigation into Google, examining its power in the online search and digital advertising markets.

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