UK Investigates IBM’s Planned $6.4bn HashiCorp Acquisition

IBM is facing a wrinkle in its proposed acquisition of San Francisco-based HashiCorp Inc, with a last minute intervention by the British competition watchdog.

It was back in April 2024 when IBM announced plans to acquire multi-cloud infrastructure automation company HashiCorp for $6.4 billion. In August the UK regulator signalled it could begin a review of the deal.

The acquisition was geared towards helping Big Blue enable its cloud clients to “manage their infrastructure and application sprawl,” to help build a “comprehensive hybrid cloud platform designed for the AI era.”

Phase 1 investigation

IBM’s acquisition had been expected to close by the end of 2024, but the UK’s competition regulator, the Competition and Markets Authority (CMA) announced on Monday that a Phase 1 investigation has begun.

The CMA said it is investigation the “anticipated acquisition” under section 96(2A) of the Enterprise Act 2002.

The CMA said it has until 25 February 2025 to decide whether the deal merits a full blown phase 2 investigation, but has given a deadline of 16 January for interested parties to make their concerns known.

“The CMA is considering whether it is or may be the case that this transaction, if carried into effect, will result in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services,” the CMA stated.

HashiCorp’s suite of products provides cloud customers with Infrastructure Lifecycle Management and Security Lifecycle Management capabilities to enable firms to automate their hybrid and multi-cloud environments.

Cloudy concerns

The CMA investigation comes amid UK regulatory concern at the state of the cloud services market.

The UK probe into the cloud computing sector began in September 2022, when Ofcom had announced it would “examine the position of Amazon, Microsoft and Google in cloud services,” as part of a “new programme of work to ensure that digital communications markets are working well for people and businesses in the UK.”

A year later in October 2023 Ofcom announced that its market study had “uncovered features that could limit competition in the cloud segment”.

It therefore asked the CMA to investigate Amazon and Microsoft’s dominance of the UK cloud market.

It was reported in November 2024 that the CMA would soon announce “behavioural” remedies to address anti-competitive practices in the cloud infrastructure industry.

The CMA in December then delayed its provisional decision until January 2025, rather than the previously slated December 2024.