IBM buys mainframe maker, sparks antitrust fears
Published: 03 Jul 2008 17:01 BST
IBM has been criticised over its recent purchase of mainframe company Platform Solutions.
The Computer & Communications Industry Association (CCIA) said the purchase of Platform Solutions (not to be confused with Platform Computing, a different company) is dangerous for the mainframe industry because it extends the control of IBM, which already dominates the market with its own mainframe servers.
"This is a black-hole acquisition," said CCIA president Ed Black. "It sucks the life out of the market and destroys the matter, transforming a market with latent potential for competition and innovation into a sector with little prospects for anything but complete domination by IBM."
The CCIA is an independent, worldwide organisation whose members include some of the biggest names in the IT industry, including Google, Microsoft, Fujitsu, Sun, Oracle, and Red Hat.
IBM's purchase of Platform Solutions on Wednesday for an undisclosed amount caused controversy quickly. In December 2006, IBM sued Platform Solutions, accusing the company of violating IBM patents on the System z mainframe. Platform Solutions counter-sued in January 2007, accusing IBM of anti-competitive behaviour in the mainframe market. Platform Solutions also filed a complaint with the European Commission over the same issue.
On Wednesday, IBM said that, as a result of the takeover, the two companies had agreed to drop their legal actions. "As part of this acquisition, both IBM and [Platform Solutions] dropped their respective claims against each other," Platform Solutions said in a statement.
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According to CCIA, regulatory authorities should take action to stop this latest takeover attempt: "Although the cost of the takeover narrowly misses the threshold level under US law for mandatory review, and also falls short under EU law, both of the world's leading antitrust authorities should, nevertheless, review this extinguishing of competition in the mainframe market."
The deal should also be stopped because it will adversely affect open systems, the CCIA claimed. "[Platform Solutions] was also committed to the open-systems model, as contrasted to IBM's closed, proprietary, monopoly model," the group stated.
According to CCIA, IBM is taking advantage of the decision in 2001 by the US Department of Justice to dissolve a 49-year-old consent decree IBM had signed which monitored IBM business practices and looked for anti-competitive behaviour. The consent decree was issued after IBM had been found guilty of anti-competitive behaviour.
"CCIA strongly believes that IBM's actions since the consent decree was dissolved [including] the purchase of PSI and new allegations by [another small mainframe-system supplier] T3 collectively paint a convincing picture that IBM has gone back to its old ways," CCIA said.
The claims come shortly after the analyst house Gartner suggested the mainframe market was enjoying a resurgence.
ZDNet.co.uk contacted IBM for comment on the allegations but the company did not respond.
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