EU Launches Antitrust Investigation Against IBM

FlorianMueller writes "The European Commission announced today that it has launched two parallel antitrust investigations into IBM's mainframe practices, following complaints lodged by T3 Technologies last year and French open source startup TurboHercules in March. EU regulators suspect an abuse of a dominant position and illegal tying of IBM's mainframe hardware to its proprietary mainframe operating system z/OS. There's even the possibility of a third case based on a complaint filed very recently by NEON, and the DoJ is also looking into this matter. IBM now finds itself in a situation previously experienced by Microsoft and Intel. This may also affect IBM's credibility when lobbying in the EU for open standards." Reader coondoggie points out a response from IBM saying that the accusations are being driven by Microsoft and other competitors.

Comments

In related news

[elrous0]

Tea Party launches Antichrist investigation against BHO.

Imagine that!

[vvaduva]

Wow...a company tying it's software to the hardware they manufactured! Holy crap...who could have imagined!?!

Re:Imagine that!

[FlorianMueller]

Wow...a company tying it's software to the hardware they manufactured! Holy crap...who could have imagined!?!

IBM isn't the only company doing that. But they have a de facto monopoly on mainframes and that's why there's an antitrust issue. It takes a market position that is at least dominant (IBM is even superdominant on mainframes) AND anticompetitive behavior. One of the two isn't enough to make a legal case. I discussed the question of market dominance versus significance in this recent blog posting.

Re:Imagine that!

[AdmiralXyz]

Thank you. For the /.ers who are (still) unclear about this, having a monopoly is not illegal. IBM is basically the only company left selling mainframes; it's not their fault if everyone else chose to leave what is an incredibly high-risk market that requires oodles of investment. Similarly, tying your hardware to your software is not illegal in itself either (so you can stop clamoring for antitrust litigation against Apple).

What's illegal is abusing a monopoly, you have to have both a dominant market position and anticompetitive activity like software/hardware lock-in before the government has a case. Which I think they do, in this instance.

Re:Imagine that!

[StormReaver]

It takes a market position that is at least dominant (IBM is even superdominant on mainframes) AND anticompetitive behavior.

While I don't care about mainframes, I hope IBM loses this case for the sole reason that it opens the doors for yet another antitrust action against Microsoft for paying retailers to exclude Linux, and against giant retailers who force Windows onto computer purchasers.

Re:Imagine that!

[Smauler]

A monopolistic hardware company can destroy other software companies with lockins... There's not a problem at the moment with Apple, for example, since they do not hold a dominant market share. Laissez faire capitalism does _not_ work, the government has to be on hand to whack down the big corporations every so often. At least, that's the theory.

Re:Imagine that!

[bws111]

This is not about 'bundling' of hardware and software (IBM stopped doing that more than 40 years ago). This is about an operating system (z/OS), which is a product IBM sells. z/OS runs only on z/Architecture machines. Currently, there is one manufacturer of z/Architecture machines - IBM. Therefore, if you want to run z/OS, you must have an IBM mainframe. Microsoft (through TurboHercules) is complaining that IBM is abusing it's position by not licensing z/OS to be run on TurboHercules' emulator. However, they only want IBM to change it's behavior, they don't want to play by the same rules. In particular, they see nothing wrong with the fact that TH infringes IBM patents, and IBM therefore does not recognize them as a legitimate competitor.

Re:Imagine that!

[bws111]

IBM stopped bundling hardware and software in 1969. z/OS is a separate product from the hardware. You do not get a copy of z/OS when you buy a zSeries machine. You can run any OS on it you wish. That includes z/OS, Linux, z/VM, z/VSE, and OpenSolaris. However, if you want to run z/OS, then you DO need a zSeries machine, as that is the only way it is licensed. TH would like IBM to license z/OS to run on their emulator. But, there is a problem - IBM believes the TH emulator infringes on over 100 of it's hardware and architecture patents, and therefore will not license z/OS to run on it.

Re:Imagine that!

[bws111]

Bundling is putting two things together in one package. You do not need z/OS to run a mainframe - you can use Linux, z/VM, OpenSolaris, or z/VSE. You do need a zSeries machine to run z/OS, but the license can be transferred to a different machine. The two products (hardware and software) are sold separately. If a legitimate competitor (ie. one that licenses IBM IP) arose, IBM may very well license z/OS to be run on that hardware. No such competitor currently exists.

Re:Imagine that!

[jgagnon]

Is IBM preventing people from writing/porting an OS for/to their zSeries machines?

What it boils down to is that people don't want to buy IBM's expensive hardware (which subsidizes their software investment) but still want to buy their software? Did Steve Jobs ever work for IBM?

But seriously, the sell the hardware with your choice of supported operating systems, some at additional cost. I'm not sure how that supports someone's "right" to run the OS on any hardware platform they choose (via emulation or any other means).

Groklaw

[just_another_sean]

Here is some facts and opinion from Groklaw, at least on the TurboHercules part.

Groklaw
Digging a Little Deeper into TurboHercules/IBM - OpenMainframe.org and Microsoft

Despite the fact that PJ probably has a few blinders at work when opining on IBM I believe this to be relevant considering
Florian's seemingly diametrically opposed (to PJ's that is) opinions on IBM...

Re:Groklaw

[poetmatt]

blinders on how? PJ is a paralegal and has no ties to IBM whatsoever.

Florian is doing nothing but spin lately. I debunked him before on this article and if he tries this again, I'll debunk him again. We don't need his spin on slashdot.

Re:Groklaw

[Anonymous Coward]

Not true. An investigation is what happens when enough competitors force the issue. It doesn't mean they think anything is wrong, just that they will look into the complaints. Here's the EU Commission press release says exactly that: "The initiation of proceedings does not imply that the Commission has proof of infringements. It only signifies that the Commission will further investigate the cases as a matter of priority."

You are so full of it, Florian.

Re:Groklaw

[pgmrdlm]

What a troll. Seriously. There is not just one manufacturer that makes mainframes. http://en.wikipedia.org/wiki/Mainframe_computer

Market

IBM mainframes dominate the mainframe market at well over 90% market share.[6] Unisys manufactures ClearPath mainframes, based on earlier Sperry and Burroughs product lines. In 2002, Hitachi co-developed the zSeries z800 with IBM to share expenses, but subsequently the two companies have not collaborated on new Hitachi models. Hewlett-Packard sells its unique NonStop systems, which it acquired with Tandem Computers and which some analysts classify as mainframes. Groupe Bull's DPS, Fujitsu (formerly Siemens) BS2000, and Fujitsu-ICL VME mainframes are still available in Europe. Fujitsu, Hitachi, and NEC (the "JCMs") still maintain nominal mainframe hardware businesses in their home Japanese market, although they have been slow to introduce new hardware models in recent years. The amount of vendor investment in mainframe development varies with marketshare. Unisys, HP, Groupe Bull, Fujitsu, Hitachi, and NEC now rely primarily on commodity Intel CPUs rather than custom processors in order to reduce their development expenses, and they have also cut back their mainframe software development. (However, Unisys still maintains its own unique CMOS processor design development for certain high-end ClearPath models but contracts chip manufacturing to IBM.) In stark contrast, IBM continues to pursue a different business strategy of mainframe investment and growth. IBM has its own large research and development organization designing new, homegrown CPUs, including mainframe processors such as 2008's 4.4 GHz quad-core z10 mainframe microprocessor. IBM is rapidly expanding its software business, including its mainframe software portfolio, to seek additional revenue and profits.[7][8]

Quit being a hypocrite and go after every mainframe manufacturer. And yes, I am calling you a hypocrite and a troll.
Nor does IBM force you to use a specific operating system. From the IBM web site of all places. http://www-03.ibm.com/systems/z/os/

Linux on System z Show descriptions | Hide descriptions Featured topic Increasing economics for server consolidation Linux and z/VM benefit from the enormous improvements of the IBM zEnterprise 196 server capabilities in the areas of consolidation, security, reliability and disaster recovery. You can "do even more with less". 10 Years Linux on IBM System z For the last decade, clients around the world have benefited from the strengths of Linux on System z. Learn more about Linux on System z

I don't see companies like Apple advertising the fact, and also offering to help install other operating systems on their hardware.

Show me in witting, on the IBM web site, where their software can not be run on mainframes built by other manufacturers. I don't want your blog, I want IBM official restrictions. Otherwise, your a troll. Nothing more, nothing less.

Re:Groklaw

[poetmatt]

That's the biggest stretch I have ever seen. Where do you come up with this? Just because someone isn't complaining about something doesn't mean the openly support it.

Oh wait. Hey, Florian, you never say anything bad about terrorism. You must support it!

That's how off base your concept is. People can be against software patents while acknowledging contracts, which is something you clearly are forgetting. If Turbohercules causes a stir, it's going to hurt open source and be very pro software patents, actually.

Your view is narrower than a thread through a needle, and I hope you realize that someday.

Does this apply to Apple?

[thetagger]

If IBM can't disallow the use of z/OS under an emulator, does it also mean that Apple can't disallow OS X on Hackintoshes?

Re:Does this apply to Apple?

[betterunixthanunix]

It runs on an emulator, and an organization that wants to continue running its older mainframe software on non-mainframe hardware may want to use such an emulator.

Re:Does this apply to Apple?

[Smauler]

If you're going to pretend Apples and PCs are interchangeable

They are for most people - they do exactly the same job. On the one hand, PC's can play just about all current games and applications, on the other Macs emit an aura of smug. YMMV, but they are essentially interchangeable.

Re:Does this apply to Apple?

[betterunixthanunix]

Sorry, but I have not swallowed Apple's marketing campaign hook, line, and sinker. Apple produces personal computers, which have always been a part of the PC market. There is not a separate "Macintosh" market, and most of Apple's product lines do not fall into the category of "workstations," if you wanted to claim there is a separate "workstation market." Mainframes, on the other hand, are quite clearly in a different market than other server computers -- they include features that is not even relevant for typical servers (i.e. the ability to replace a motherboard without interrupting service, the ability to execute instructions on two processors at the same time to reduce the chances of erroneous results, etc.); the difference is as clear as the difference between the server market and the PC market. True, a mainframe can be replaced with a couple hundred servers, but I can say the same about replacing a server with a desktop, or perhaps a hammer and a screwdriver.

The meat: do patents trump interoperability?

[ciaran_o_riordan]

Finally, we get to the interesting part of TurboHercules v. IBM:

There's an antitrust dispute, with TurboHercules saying that IBM is abusing a dominant market position. That's normal. The cool part in this case is that IBM has mentioned that they have a pile of software patents.

That means that if the European institutions (commission and court of justice) decide that IBM has to allow interoperability, they should also have to decide if IBM can subsequently use their mentioned software patents to block that required interoperability.

It sounds like a no-brainer. Of course they should be allowed to use patents to negate court-imposed requirements. But it's not a no-brainer: It didn't work in the US, and it didn't work previously in the EU.

• IBM and TurboHercules, 2010
• Antitrust doesn't work
• Competition law defence
• Interoperability exception

"IBM now finds itself in a situation ..."

[CaptainOfSpray]

"IBM now finds itself in a situation previously experienced by Microsoft and Intel."

How fast we forgot! Or maybe it's that you young uns never knew...IBM wrote the book on fighting and defeating anti-trust actions by not winning in court, but winning in the market place. Check out what happened 1956 and 1969, and how those events made IBM stronger, not weaker.

Previous situation?

[MaggieL]

"IBM now finds itself in a situation previously experienced by Microsoft and Intel."

  Actually, IBM now finds itself in a situation previously experienced by IBM, too.

US centric view of the world

[thbb]

You're talking about US law.

This a EU investigation, and its legal grounding is different. Among others: tying your hardware to your software *is* illegal in EU, as it constitutes a bundled sale. Also, monopolies and oligopoles are under tight surveillance, and the EU can fine them if their margins reach beyond a certain threshold. There are full teams of statisticians who study sales numbers of telcos in EU, and determine what is a "fair" margin they are entitled to make.

This is what we call a "market-driven social economy", where we have managed to insert some of the good ideas of socialism while still relying on the market to allow some form of competition between tightly controlled corporations.