Feds Investigate IBM Mainframe Business

IBM’s domination of the mainframe industry is under the spotlight after reports emerged that federal antitrust regulators are investigating possible antitrust violations against Big Blue’s mainframe business.

The industry trade group, the Computer & Communications Association (CCIA), has often complained about IBM’s dominance in the mainframe space, according to various media reports. In addition, association member T3 Technologies has also confirmed that it has received a civil investigation demand from the Department of Justice in relation to IBM’s mainframe business.

T3 is an established provider of IBM-compatible mainframe alternatives and has been a vocal critic of IBM in the past. Earlier this year it filed an antitrust complaint about Big Blue with the European Commission. It also reportedly sued IBM two years ago over its market dominance, though the suit was apparently dismissed.

According to a MarketWatch report, a CCIA spokesperson said the association in September had presented a whitepaper to the DOJ outlining its complaints against IBM, saying they have a history of punishing other companies in an attempt to maintain its dominant position.

An IBM spokesman was quoted as saying the company would co-operate with any DOJ requests.

IBM is the dominant force in the mainframe space it created five decades ago, though others – such as Unisys – also sell the massive systems. A host of software vendors, including BMC Software and CA, sell solutions around managing mainframes.

Analysts have long predicted the demise of mainframes because of the growth of smaller and increasingly powerful x86 servers. However, the mainframe business has remained robust, and IBM has aggressively expanded the reach of its Series z systems.

Indeed, IBM has created specialty engines designed to enable the mainframe to better run Linux and Java workloads, and has created smaller, more cost-effective systems aimed at mid-sized enterprises.

IBM also has pitched the mainframes as alternatives to the larger Unix systems from the likes of Hewlett-Packard and Sun Microsystems, which is in the process of being bought by Oracle.

Oracle is among the members of the CCIA, as is Microsoft and chip maker Advanced Micro Devices.

The DOJ investigation comes at a time when regulators are taking a close look at antitrust issues around large technology vendors. Earlier this year, the European Commission (the antitrust arm of the European Union) fined Intel $1.45 billion for its anticompetitive practices aimed at hindering competition from AMD.

Around the same time, the Obama administration revoked an antitrust policy established under President Bush that regulators said hindered the government’s ability to fight anticompetitive behaviour by companies.