IBM faces DOJ antitrust inquiry on mainframes

IBM is keeping customers and vendors from exploring alternatives, a trade group says

IBM is facing an antitrust inquiry from the U.S. Department of Justice for recent actions the company has taken in the mainframe computer market, according to the trade group that filed the complaint.

The DOJ has begun issuing formal requests for information related to a complaint filed against IBM in September, according to the Computer and Communications Industry Association (CCIA), the trade group that filed the complaint.

CCIA's complaint against IBM alleges that the company has refused to issue licenses for IBM's mainframe OS to competitors, as required in a 1970s antitrust consent decree with the DOJ that was terminated in 2001. In some cases, IBM has yanked the OS license from customers trying to switch from IBM mainframe hardware to a competitor's, said Ed Black, CCIA's president.

Several large and small companies would like to compete with IBM in the mainframe market, particularly in software and services for mainframes, but IBM's actions have allowed it to maintain a monopoly, Black said.

"It's a really big case," added Heather Greenfield, a CCIA spokeswoman. "There are tons of companies cheering that aren't willing to be quite so public because they have to deal with IBM in other ways."

The DOJ will not comment on the complaint, a DOJ spokeswoman said.

IBM didn't have an immediate comment on the DOJ investigation.

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 Solution, 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.

In 2006, IBM sued Platform Solutions over licenses the smaller company had purchased from Amdahl, a division of former mainframe competitor Fujitsu. IBM's lawsuit alleged that the licenses infringed its intellectual property. Platform Solutions filed a countersuit. In 2008, IBM purchased Platform Solutions, putting an end to the legal wrangling.

But the complaint goes "way beyond" the Platform Solutions case, Black said. 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."

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