The Roots Of IBM’s New Legal Mainframe Troubles

For IBM and the mainframe space, the beginning of this decade was a key time, according to industry observers.

In 2001, IBM was finally freed from the last remaining provisions of an ancient court-ordered consent decree, which dated back four decades and stemmed from anticompetitive behavior by IBM in the 1950s, according to the Computer and Communications Industry Association, an industry trade group that has been a vocal critic of IBM for years.

It also was around that time that IBM began migrating its mainframe systems from 32-bit to 64-bit computing, an expensive proposition that convinced rivals such as Amdahl and Hitachi Data Systems — which didn’t want to spend the money to make similar moves — to exit the business, said Jean Bozman, vice president with analyst firm IDC.

Competitors left IBM to it

As a result of both moves, IBM was left unhindered by court officials to operate more freely in a market that it had already dominated for years and that now had fewer competitors.

Since that time, IBM has been aggressively protecting its mainframe turf, and exploiting its position to punish customers and rivals that try to run mainframe workloads on non-IBM hardware or migrate off the platform altogether, according to the summary of a briefing the CCIA gave federal regulators last month.

Such behavior will be a focus of the Department of Justice, which the CCIA and officials with IBM rival T3 Technologies say has just begun an initial inquiry into IBM practices. DOJ officials have declined to comment.

“Intervention is necessary to stop IBM’s exclusionary behavior,” according to the summary, authored by CCIA Chairman Ed Black. “IBM is exploiting its market power to protect its mainframe monopolies.”

Regulators contacted T3 for information last week, around the same time a U.S. District Court judge dismissed T3’s antitrust lawsuit against IBM. T3 President Steven Friedman said the company will appeal the dismissal.

In a brief statement, an IBM spokesman said the vendor will cooperate with the DOJ, and noting the court’s dismissal of T3’s suit, said, “We continue to believe there is no merit to T3’s claims.”

Mainframes have played a crucial role for many of the world’s largest companies for decades, and continue to run mission-critical, high-transaction workloads. Starting in the 1960s, IBM began licensing its intellectual property to enable other companies to create products that interoperate with its mainframes and, later, its mainframe OS to customers, Black said.

The result was greater dependence by businesses on their mainframes, and that by the time lower-cost alternative systems came to the market, many of these programs were unable to run on anything but IBM mainframes, locking them into the platform, he said.#