Neon Complains To EC About IBM’s Business Practices

Neon Enterprise Software, which already is in a legal dispute with IBM over the tech giant’s business practices surrounding its mainframe business, will now file a complaint with European regulators.

In a brief statement released on 24  June, Neon officials said the company will file the complaint with the European Commission—the antitrust arm of the European Union—alleging “ongoing anti-competitive and abusive conduct” by IBM to do with its Series z mainframe business.

Growing list of complaints against IBM

The complaint would add to the growing list of allegations leveled by companies such as Neon that offer products they say will help IBM mainframe users save millions of dollars.

IBM officials have strongly defended the company’s business practices, saying companies like Neon, TurboHercules and T3 Technologies are trying to make money by violating IBM’s intellectual property and by trying to induce System z customers to violate their licenses with IBM.

Neon’s EC complaint won’t be the first filed against IBM over these issues. TurboHercules, which sells an open-source mainframe emulator that enables businesses to run mainframe applications on less expensive non-mainframe systems, filed a complaint with the EC in March alleging that IBM is unfairly tying its mainframe OS, the z/OS, to its System z machines, hindering competition.

The 10-year-old French company has between 5,000 and 10,000 users, according to TurboHercules officials.

For its part, Neon filed a lawsuit in December accusing IBM of bullying customers into staying away from Neon’s zPrime software, which it said is damaging its business. The suit also said IBM, which stands to lose millions because of Neon’s product, has made false statements to customers, telling them that using zPrime violates their licensing contracts with IBM.

Neon’s zPrime software lets IBM mainframe customers move workloads around in such a way as to enable them to avoid paying licensing fees to IBM, which Neon officials say can save those customers millions of dollars a year. Essentially, the software lets customers move more of their mainframe workloads from expensive central processors to less expensive IBM zAAP and zIIP specialty processors.

Customers pay software licensing fees to run applications on the central processors, but not on the specialty engines. Those specialty processors were created to move some workloads — such as Linux and Java tasks — off of the central processor and enable the mainframes to take on more modern workloads.

T3 Technologies, a one-time partner of IBM, offers non-mainframe systems that can run mainframe applications. It also has filed a complaint against IBM in Europe.

IBM Countersuit

IBM filed a countersuit against Neon in January.

“This case is about Neon’s attempted hijacking of IBM’s intellectual property,” IBM said in the complaint. “Neon’s business model expressly depends upon Neon inducing IBM’s customers to violate their agreements with IBM. In this respect, it is no different than that of a crafty technician who promises, for a fee, to rig your cable box so you can watch premium TV channels without paying the cable company. Even if it could be accomplished technically, it is neither lawful nor ethical.”

Neon officials have contended that nothing in IBM’s licensing contracts says customers can’t move more workloads onto the specialty processors, and that IBM statements to the contrary are false and misleading. Neon claims that zPrime can save customers as much as 20 percent on their annual mainframe costs.

Competitors reportedly are not the only organisations interested in IBM’s mainframe business practices. The US Department of Justice in October began a preliminary investigation into IBM’s mainframe business.