IBM Mainframe Niche Market Draws EU Regulatory Probe

News Analysis: When the European Union completes the investigation of IBM's mainframe business, it will likely find that while IBM may dominate the mainframe market, it's still a small portion of today's overall computer industry.

When European Union regulators announced an investigation into IBM's business practices in Europe, it was reacting to complaints from two companies that produce mainframe emulators for Intel platforms.

The two companies, T3T and Turbo-Hercules, claim that they are being cut out of the market because IBM won't sell its mainframe software to them for use on their software that allows x86 platforms to run IBM mainframe software. IBM faced a similar investigation in the United States in the past, and until 2000 was required by the Justice Department in the United States to decouple hardware and software sales.

The order by the DOJ has expired, and since that time, the last makers of IBM-compatible mainframe computers have gone out of business. However, a number of mainframe makers remain in operation serving their own markets. In this new European investigation, there are actually two actions. The first, regarding the sale of IBM mainframe emulators, was brought about because of the complaint. A second investigation was initiated by the European Commission's Competition Commissioner Joaquin Almunia in regard to its claim that IBM is favoring its own maintenance business over others, and that it is delaying deliveries of parts to third-party maintenance companies as a way to force them out of business. The European Commission is the Executive Branch of the European Union.

Right now the investigation is in the opening, or "Mutual Accusation," stage, in which the various players blame each other for whatever happens to be in question. IBM, for example, is saying it's all Microsoft's fault. This is a pretty easy thing to do, since, after all, when you're as big as Microsoft, everything that happens is really your fault.

Assuming that the EC investigation finds IBM at fault, it's possible that the company could be forced to pay a fine, just as Microsoft and Intel have had to do. But the investigation will take years, IBM will have the right to appeal, and that will take even more years. As you can tell, nothing is likely to happen anytime soon. Unless IBM decides that its proprietary approach is a bad idea (and it might), then the makers of emulators are in for some tough sledding for a while.