Analysts say the Department of Justice's inquiry into complaints about IBM's mainframe business should give other large technology vendors an idea of how the antitrust issue will play out under the Obama administration. The analysts also draw on IBM and Apple as examples to give tech giants a couple of suggestions on how to dull the pain of such inquiries.
Five months ago, on May 11, the Obama administration revoked an antitrust
established during President Bush's regime that regulators said hindered
their ability to take on anticompetitive behavior by companies that dominate
At the time, Department of Justice officials said antitrust policies under
Bush contributed to the economic downturn that led to the global recession, and
promised that they would be more
in policing such behavior. DOJ officials have also said the
technology and telecommunications industries were among the sectors they would
keep a particularly close eye on.
Any doubt about that was wiped away in October when the DOJ reportedly began
a preliminary investigation into IBM
and its dominance in the mainframe space.
That came about the same time a
U.S. District Court judge in New York
dismissed a lawsuit filed by T3 Technologies against IBM
anticompetitive practices. T3, which sells non-IBM hardware that runs mainframe
workloads, will appeal the dismissal.
T3 and the CCIA (Computer & Communications Industry Association) have
filed complaints saying IBM's refusal to
license its z/OS mainframe operating system is unfair to companies like T3. The
CCIA, which counts such vendors as Microsoft, Oracle and Advanced Micro Devices
among its members, briefed DOJ investigators in September on its concerns about
IBM and the mainframe market.
Charles King, an analyst with Pund-IT Research, said there are numerous
issues connected with the case, involving subjects such as competitive Unix
systems, questions about how dominant IBM
mainframes are in the server space and IBM's
continued push to widen the workloads the mainframes will support while also
driving down costs.
However, for the IT industry as a whole, what is more worrisome is the
degree to which the DOJ is now reflecting the policies of sitting
administrations, King said, as "radical shifts in DOJ philosophy and
strategy can significantly add to the difficulties that businesses face in
operating and competing during what is arguably the most challenging economic environment
in a generation," King wrote in a report issued Oct. 13.
President Obama has been vocal about his support for business regulations,
particularly given the belief that it was the lack of such regulations that
helped create the current economic problems, so the aggressive attitude of
regulators now isn't a shock. But it does suggest that competition and
antitrust regulation will continue to be tied closely to whatever
administration is in charge, creating a moving target for companies.
"The complaints against IBM could
eventually qualify as a litmus test of the Obama administration's broader
attitudes toward business and market competition," King wrote. "If
the DOJ acts in a careful, measured way it could repair a reputation damaged by
eight years of laissez-faire excesses. But if the DOJ gives credence to what we
consider to be the essentially baseless claims of T3 and the CCIA, it could
portend a very long four or eight years, not just for IBM,
but for many U.S.
companies in the technology industry and other sectors."