NEWS & ANALYSIS

EU Commission initiates formal investigations against IBM in two cases of suspected abuse of dominant market position

by Directorate General for Competition of the European Commission

(26 July, 2010)

The European Commission has decided to initiate formal antitrust investigations against IBM Corporation in two separate cases of alleged infringements of EU antitrust rules related to the abuse of a dominant market position (Article 102 TFEU). Both cases are related to IBM's conduct on the market for mainframe computers. The first case follows complaints by emulator software vendors T3 and Turbo Hercules, and focuses on IBM's alleged tying of mainframe hardware to its mainframe operating system. The second is an investigation begun on the Commission's own initiative of IBM's alleged discriminatory behaviour towards competing suppliers of mainframe maintenance services.

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BowlerRoger Bowler Responds to IBM Patent Attack on Open Source

by Roger Bowler Creator of Hercules and Co-founder of TurboHercules

(Posted in News & Blogs section of turbohercules.com on 6 April, 2010)

As many of you know, the company I founded to promote the Hercules open source mainframe emulator, TurboHercules SAS, has filed an antitrust complaint against IBM with the European Commission in Brussels. We are not asking that IBM be subjected to punishing fines or anything like that. We simply want IBM to agree to allow legitimate paying customers of its z/OS mainframe operating system to deploy that software on the hardware platforms of their choice – including, should they so choose, on low-cost servers using Intel or AMD microprocessors and Hercules.

I want to make clear that we undertook this action reluctantly, and only after a long period of reflection during which we reached out to IBM to see if there was some way to resolve our differences amicably. I regret to report that IBM rebuffed our efforts at conciliation, and even added fuel to the fire by launching accusations against Hercules. I would like to take this opportunity to respond to some of those charges.

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The Issues of Competition in Mainframe and Associated Services in India

by Indian Council for Research on International Economic Relations and Indicus Analytics

Very little is known about the extent and nature of competition in the mainframe and associated services market in India. This is the first study to analyze competition and related issues in the Indian server market, with an extensive focus on mainframe computing.

Download the report PDF (4MB)

Steven FriedmanThe T3 Technologies story

by Steven Friedman, T3 Technologies

For over 15 years, my company was a successful IBM Business Partner. I used to have a thriving company with over 50 employees, nearly 1,000 customers in 28 countries (including 200 customers in 15 European Community states) and a profitable revenue stream earned through selling mainframe solutions to IBM customers. However, now our company is effectively out of business due to the direct actions of the company I used to be closely aligned with: IBM.

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2010 TurboHercules European Commission Complaint

On July 29, 2009, TurboHercules sent a letter to IBM France. This letter was a request for IBM to consider allowing customers to license IBM mainframe operating systems such as z/OS for use on the Hercules emulator.  TurboHercules asked that IBM grant its customers these licenses under fair and reasonable terms, but left it entirely up to IBM to set prices and conditions.  TurboHercules also expressed interest in seeing a class of academic licenses that would allow a wider range of schools and universities to teach mainframe concepts and skills using Hercules.

On November 4, 2009, TurboHercules received a reply from IBM. IBM responded by saying that “we think that mimicking IBM’s proprietary, 64-bit System z architecture requires IBM intellectual property, and you will understand that IBM could not reasonably be asked to consider licensing its operating systems for use on infringing platforms.“  The letter went on to say: “We do not think that mimicking IBM’s instruction set architectures on commodity OEM hardware is in any way innovative.“

On November 18, 2009, TurboHercules responded to IBM. TurboHercules expressed surprise at IBM’s claim that the Hercules emulator infringes IBM intellectual property, given that this open source software has been widely used in the IBM mainframe community for 10 years with IBM’s full knowledge and, in many cases, active encouragement. TurboHercules asked that IBM identify the intellectual property it believes Hercules infringes. 

On March 11, 2010, IBM responded to TurboHercules' letter. (TurboHercules did not receive the response until March 25, 2010). IBM responded by stating: “I enclose with this letter a non-exhaustive list of IBM U.S. patents that protect innovative elements of IBM’s mainframe architecture and that IBM believes will be infringed by an emulator covering those elements...In these circumstances, I trust you will understand that IBM cannot agree to your request to reconsider its position.“

On March 23, 2010, TurboHercules SAS filed a formal complaint against IBM with the EC's Directorate General for Competition in Brussels. The complaint alleges that IBM is preventing customers from using the open-source emulator, Hercules, to run customers' applications on non-mainframe computers.

On July 26, 2010, in response to TurboHurcules' complaint, the EC initiated a formal investigation against IBM in two separate cases of alleged infringements of EU antitrust rules related to the abuse of a dominant market position. "The first case follows complaints by emulator software vendors T3 and Turbo Hercules, and focuses on IBM's alleged tying of mainframe hardware to its mainframe operating system The second is an investigation begun on the Commission's own initiative of IBM's alleged discriminatory behaviour towards competing suppliers of mainframe maintenance services."

TurboHercules issued a press release in response to the EC's announcement here.

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