IBM Faces DOJ Antitrust Inquiry On Mainframes

Several sources are reporting that IBM is facing an antitrust inquiry from the US Department of Justice due to a supposed refusal to issue mainframe OS licenses to competitors. "Part of CCIA's complaint stems from the tech giant's treatment of former competitor Platform Solutions. IBM had little competition in the mainframe market when Platform Solutions, early this decade, began work on servers that could mimic the behavior of more expensive IBM mainframes, CCIA said. Platform Solutions, based on past mainframe agreements between IBM and the DOJ, requested copies of IBM's OS and technical information under a licensing agreement. IBM declined to grant Platform Solutions a license and prohibited customers from transferring IBM software licenses to Platform Solutions machines, said CCIA, which has members that are potential competitors of IBM."

Comments

Here we go again

[WinterSolstice]

We spent years trying to get IBM to stop being a monopolistic and evil company, finally got them to change (a bit).
Then Ma Bell, resulting in them being broken up.

Now ATT/Bell is back to being a gigantic mega-company again, and IBM is back to the same stuff they tried against DEC and others.

The more things change...

Re:Here we go again

[oh_my_080980980]

The case was dismissed by a Federal Judge:

http://www.nytimes.com/2009/10/08/technology/companies/08antitrust.html?_r=1

CCIA is shill for Microsoft. Thats' why this is happening.

http://mainframe.typepad.com/blog/2009/10/press-reports-us-justice-dept-opens-ibm-antitrust-probe.html

Re:Here we go again

[Steeltalon]

What are you talking about?

The Mainframe market had competition. Up until around 2000 Fujitsu/Amdahl and Hitachi both had Mainframe systems (the so called Plug Compatible Manufacturers). They decided to bail out of the market because they didn't see enough profit in them. Since that point, the mainframe has had constant competition from smaller systems. This investigation is nothing short of ridiculous.

Re:Here we go again

[CrimsonAvenger]

Hmmm, look at who was running the government when abusive monopolies are formed and re-formed, and who is running the government when the DOJ issues antitrust tickets?

Hmm, the previous IBM antitrust case was started under the Republicans, and dismissed under the Republicans. The behaviour that caused the previous case would have been happening under the Democrats (and presumably the Republicans, since it wouldn't have come to a trial if the behaviour had been stopped a year or so earlier).

The current case will be (if it is started t all) started under the Democrats, and the behaviour happened under the Republicans (and, presumably the Democrats, since they wouldn't bring charges if the behaviour had stopped last year).

No comment on who will be in charge when this is dropped, though at least part of it was dropped already, under the Democrats.

Your point was?

Re:Here we go again

[Old97]

No its not. IBM has a monopoly which is not illegal. However, it may be abusing its monopoly position by denying others entry into the market. This market is distinctly different from distributed computing. The preponderance of high value (meaning money and profits) computing by large enterprises is still done on mainframes and they are all at IBM's mercy. It's difficult and very expensive to get off the mainframe. Much more so than it is to dump Windows.

Re:Here we go again

[mcgrew]

Your point was?

Republicans are lax about enforcing laws against corporations. They're only "tough on crime" when the criminal is a poor person, if the criminal is a corporation they get off the hook scott free. We're not talking about the legislature here, we're talking about the Executive branch. Clinton's DoJ prosecuted Microsoft, and Bush's DoJ let them off without so much as a slap on the wrist.

We had a Republican in the White House for eight years, during this time nothing was done about IBM's abusive monopoly. Now that there's a Democrat there there is some investigation being done (remember, Obama has only been in office for 9 months and this stuff doesn't move quickly).

Mind you, I'm no fan of either mainstream party, but the Democrats at least pay lip service to companies and peoiple making less than a million dollars a year. IIRC I voted for the Libertarian last election.

Re:Here we go again

[lenester]

[blockquote]IIRC I voted for the Libertarian last election.[/blockquote] If the recipient of your Presidential vote less than a year ago is qualified with "IIRC," you probably shouldn't be voting at all.

If Slashdot were fifty years old....

[david_thornley]

If Slashdot were old enough, this would be a dupe. This is exactly what IBM was slapped down for in the 1960s. The anti-trust case left companies like Itel and Amdahl able to produce and sell IBM-compatible mainframes running IBM software.

Re:If Slashdot were fifty years old....

[Anonymous Coward]

Antitrust jurisprudence has changed a lot since the '60s. IBM's current behavior is most likely legal under current law. There is generally nothing wrong with unilateral refusals to deal, and I don't see how this situation deserves special treatment.

The problem here is that even though IBM's behavior is almost certainly legal, the DOJ could force IBM to spend a lot of money on essentially frivolous litigation. Anyone who favors the rule of law should be against these tactics. If the Obama administration wants to change the law, they should do it through Congress. The Congressional route is more efficient and fair, and won't punish companies for behavior that is legal under current law.

Re:If Slashdot were fifty years old....

[ZekoMal]

The Congressional route is more efficient and fair when it isn't full to the rafters with inefficient corporate puppets that IBM can eagerly stuff full of cash to prevent any sort of trouble coming there way.

Re:If Slashdot were fifty years old....

[SparkyOfGenius]

This is not necessarily the case. Although it is correct to say that usually a company is under no "duty" to license out its IP, there are notable exceptions. One being, if a company has licensed its IP openly in the past and made assurances of future RAND licensing and a market/ecosystem has formed around it and then when it reaches a dominant position where the entry barriers are high (i.e. "installed base opportunism") and changes it strategy in order to make exorbitant profits--then antitrust might recognize a duty to deal.

In the mainframe space, IBM was under a consent decree (settlement with government) and government scrutiny until 2001, where it was deemed that due to changes in the IT world - the decree was no longer necessary b/c IBM faced new sources of competition. This competition never materialized--and in fact the few competitors who were in the market exited because they were no longer guaranteed interface specifications and licensing necessary to make compatible machines.

From the customer side, the vast majority of the world's corporate and public sector data is locked-into the mainframe--especially areas that require high-levels of batch processing--financial institutions, airlines, credit card companies, health care, social security administration, etc. It is incredibly hard to "migrate" off of a mainframe--sometimes impossible. This is why IBM can charge so much to legacy users--a gig of RAM on a mainframe costs almost $6,000--a little bit of a markup. In fact, mainframes apparently account for nearly a 1/4 of IBM's nearly $100 million annual revenue. The world is so tied to mainframes behind the scenes--IBM has even said on its own website: "It is no exaggeration to say that, without the Internet, many businesses would suffer but, without the IBM mainframe, the global financial system would collapse."

The companies at which IBM has allegedly taken this action against have all focused on helping customers migrate off the mainframe and allow this data to move to other, less expensive machines. It would definitely make business sense for IBM to do that--however, I also believe it is a likely violation of antitrust law--both here and in Europe.

Re:If Slashdot were fifty years old....

[aztracker1]

Well, given those circumstances, where's the DOJ Antitrust Inquiry into Apple for OSX licensing?

Bad news for Apple?

[Burdell]

How is this different from what Apple does with OS X and Macs?

Re:Bad news for Apple?

[bluefoxlucid]

It's not.

Re:Bad news for Apple?

[alop]

Technically, anything proprietary is monopolistic...

If you're the ONLY one making [mainframes/Macintosh/widget Z], wouldn't that make you an automatic monopoly?

If someone wants to make a work-a-like/compatible product to your proprietary product, are you bound to oblige?

Re:Bad news for Apple?

[Anonymous Coward]

While the direct circumstance appears the same, the big picture is not. IBM enjoys having practically no competition in the mainframe market. Apple's desktop/laptop market shares plenty of competition with PCs. A company that builds desktops or laptops that isn't allowed to license OSX still has the option of obtaining a license of windows or installing a Linux distribution on their machine. This will prevent Apple from being forced to open OSX, at least from a monopolistic standpoint.

Re:Bad news for Apple?

[MBGMorden]

What I'd find equally interesting is how such a decision could affect game console manufacturers. There are already third party/cloned NES,SNES, and Genesis systems but those are all for obsolete platforms that I doubt Sega OR Nintendo really care much about anymore.

However, it would be interesting to see a clone Xbox 360, or a clone PS3, etc. If the road were legally clear to make them (such as if a precedence were set by a lawsuit like this one), then I'd bet we'd see clones of such systems out of Taiwan within a year or two. Heck I'm surprised that SOME company over there hasn't made a 3rd party Mac-compatible motherboard.

Re:Bad news for Apple?

[mcgrew]

If Apple's and Microsoft's market shares were reversed, it wouldn't be different at all. But Apple by no means has a monopoly on PCs. This is about IBM abusing its mainframe monopoly. If Sun, etc were as big as IBM it would be ok, but it's not.

Re:Bad news for Apple?

[h2okies]

IBM is a monopoly. There are no other competitors in the mainframe business. IBM just doesnt make the OS they make the hardware as well. They essentially broke every other competitors back by either pricing them out or buying them up. They became the defacto big iron supplier in the world and abused said position every time anyone came out with better faster or cheaper hardware than them, history has repeated itself. This position allows them to dictate the market place and pretty much kill off invention and improvement. The pc market place is full of competitors duking it out to make a buck and gain your business as a hardware supplier. The mainframe you have a choice for both the OS and hardware it is IBM or ...

Re:Bad news for Apple?

[mewsenews]

How is this different from what Apple does with OS X and Macs?

IBM is screwing with the big boys rather than screwing over "consumers". If someone tried to make an interoperable cell phone that was capable of running iPhone apps they would be shut down so fast your head would spin.

The entire PC industry started when someone reverse engineered the PC bios but those days are long gone and we live with laws like the DMCA, software patents, and other abominations that stifle innovation.

Re:Bad news for Apple?

[Anonymous Codger]

If Apple had an effective monopoly on desktop and laptop machines (as IBM does on mainframes), it would be the same. But since Apple has no such monopoly, it's completely different.

And don't make the absurd statement that Apple has a monopoly on Macs unless you're willing to call BMW a monopoly because they're the only company that can build BMWs.

Re:Bad news for Apple?

[Trepidity]

Mainframes aren't really some insulated-from-competition class by themselves anymore, though. For almost all jobs where a zSeries is an option, there are other options as well. In the modern market, I'd see a zSeries as just one product offering in a competitive market, not a product class on its own.

Re:Bad news for Apple?

[h2okies]

Except both of you are incorrect. There wasn't this massive mainframe competition. IBM was THE company. The others attempted to gain entry into their already owned MF market and at every corner because IBM had already a leg up on virtually all comers they used predatory practices and price pressure and refusal to cross license and highly restrictive software licenses to drive out any competition. They further forced any existing customer down a lengthy road of renewal negotiations if any outside big iron suddenly showed up. IBM is the master at that when it comes to their MF products. If had a nickle for every time I had to sit at the table with the MF reps as they squeezed out anyone who attempted to break into our shop id be a much wealthier person.

If you think there was lots of competition in the 90s you are highly mistaken. The few that were left held little niche market share and did so only due to the remaining anti-trust rules in place at the time. That market share then evaporated when clustered computing and personal computing took hold and not just marketing. The remaining companies could not compete against with IBM with that drop in sales and Microsft. UNIX systems too played a key role in eroding what was already slim sales of these firms compared to IBM. Even IBM suffered dearly in its MF division but was buoyed by its software and PC sales.

Having lived through this before and seen these claims before one would think IBM was all saintly and made all these massive improvements....mmmmmm no. The MF of today is relatively unchanged from the MF of 20 years ago. There have been upgrades and improvements for sure but no massive leaps. Newer silicon and face lift of the OS.

These claims that MS does not have a monopoly must come from those who apparently doent work with MF. They most certainly have a LOCK on the MAINFRAME market place and in the high TPS world, mainframe is still king.F ind a large bank of trading floor that doesn't have one locked away churning away. You might want to re-read that article you posted as well....IBMs z accounted for 9% of server revenue but what percent of MAINFRAME revenue where they certainly enjoy a monopoly position. When its comes to certain transaction based systems, GA systems etc. its mainframe or go out of business.

For the record IBM does indeed make some very good MF products that can in some cases be absolutely the king of reliability but it comes at a very very steep cost, kept artificially high due to their dominant and in many cases predatory position in that market.

In other news...

[vrmlguy]

NASA announced plans to land a man on the moon by the end of the decade, the president announced that he was not a crook, and thousands of hippies descended upon Woodstock for 3 days of peace & music,

Interoperability

[Anonymous Coward]

I never understood how companies could get in trouble for not sharing interoperability information. If I was trying to shut out my competitors, I would offer the information as a license and just charge a stupidly high amount for it.

Platform Solutions: We want to make compatible hardware. Give us documents
IBM: No.
Platform Solutions: Fine, we'll sue.
IBM: Ok. Here is the docs. You owe us $1,000,000,000 to use them

It works well for keeping Joe blow from writing software for consoles, I don't see why it wouldn't work well elsewhere.

(unless some other company tried it and got cut down in court.)

It's the OS

[poptones]

Cloning a mainframe doesn't mean cloning the operating system. Cloning a mac doesn't mean cloning the OS - I can make a workalike mac but apple still wont license me the software. Game machines have built in non portable operating systems. XB360s have operating systems married to their disc drives! In order to clone a game machine I'd have to clone the built in operating system which cannot be done due to copyright restrictions.

What I find interesting is how someone can make a workalike mainframe without violating IBM patents on some CPU/management/I/Oprocessing hardware. AMD and Cyrix have been able to "clone" Intel functionality only because of past agreements and licensing deals and lawsuits.

Re:It's the OS

[MBGMorden]

Cloning a mainframe doesn't mean cloning the operating system. Cloning a mac doesn't mean cloning the OS - I can make a workalike mac but apple still wont license me the software.

I think that's the crux of the case though. Depending on how courts decide on the issue, refusing to license the software to run on compatible hardware from a third party could be construed as an anti-competitive behavior. Precedent was set with Bell for splitting up a company to solve the issue. It would be interesting to see a court ordered separation of the hardware and software divisions of both IBM and Apple.

I see a business oportunity

[NoYob]

. Many mainframe customers would like to find cheaper alternatives, but IBM has prevented them from doing so, he said.

"There's a number of things they have done to numerous companies," he said. "In a time of economic troubles, government deficits and corporate problems, there's a lot of customers that [would find] a choice and lower costs really desirable."

Develop a "mainframe" computer - whatever that means these days, create an OS derived from Linux and develop a COBOL compiler and CICS system for it. I'm sure Websphere can be incorporated too.

Exactly, what's the big deal - technically?

Business: IBM's contracts run out, and move in with a cheaper alternative.

Re:I see a business oportunity

[azgard]

In fact, there is project like that:
http://www.z390.org/

But as a mainframe programmer, I can tell you, z/OS is horribly complex due to backward compatibility going back to System/360. So implementing a complete and reliable solution is not an easy task.

Do what MS does.

[Ant P.]

Give the hardware away for free with each OS licence sold.

Or in other words, the pricing doesn't change for legitimate customers, but these guys have to eat the cost of a full system plus their own hardware per sale. That'll stop it pretty fast.

Hercules is part of it, too

[Jay Maynard]

The NYTimes story on the inquiry mentions that they're also looking at IBM's refusal to license their software to run on the Hercules open source IBM mainframe emulator. It ill be interesting to see if this goes anywhere.

Re:Hercules is part of it, too

[Jay Maynard]

I've argued for an IBM mainframe software personal use license for a decade, inspired by the OpenVMS hobbyist license. It's fallen on deaf ears.

They're not the only ones...

[jasen666]

Why is this different from Apple not licensing use of it's OS on non-Apple computers?
Wasn't Irix only licensed to run on SGI machines?
HP-UX? Others?

Re:What? Apple can do this but IBM can't?

[int69h]

Personal Computer companies: Many
Mainframe companies: IBM

I know the difference is subtle, but look hard and you'll spot it.

This is basically the Apple vs Palm situation

[bl968]

But if this was Apple vs Palm and iTunes instead of IBM and a mainframe OS, the fanboi's would be saying but Apple developed their software and have the right to deny the use of it to anyone else. Since this is IBM I bet the debate is going the other way... Lets go take a peek....

Wait!

[WiiVault]

So do we hate IBM now?