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

[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

[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....

[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.

Bad news for Apple?

[Burdell]

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

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?

[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.

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,

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.

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.

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: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.