The rumor that IBM is willing to spend $6.5 billion to acquire Sun Microsystems raises potential antitrust questions about the enterprise server market, where both companies hold a dominant market share in servers running on the Unix operating system. Then come questions about the competitive future of the storage, middleware, Java and database sectors.Rumors are nothing more than rumors, but that hasn't stopped the rampant
speculation that has burned up the Internet since media reports March 18 broke
the news that IBM may be in unconfirmed discussions
to buy Sun Microsystems for $6.5 billion in cash. Phrases like "software
monolith," "enterprise giant" and "high-tech juggernaut" have all been
used to describe the result of an IBM
purchase of Sun.
"Illegal," though, was not being bandied about until Ed Black,
president and CEO of the trade group CCIA
(Computer & Communications Industry Association) joined in the massive
speculation over the possible deal between IBM
and Sun.
"If this merger is announced, it will require careful, extensive review by
antitrust authorities because of the wide range of tech products both companies
now produce," Black said in a statement. "IBM
and Sun have been fierce competitors for years. A merger would eliminate a key
competitor, which affects choice and prices down the line on numerous IT
products."
Black contends that an IBM-Sun merger would
create serious antitrust questions for the server market, where both companies
hold a dominant market share in servers running on the Unix operating system.
Black also said the deal would have "implications" for the storage,
middleware, Java and database sectors.
Click here to read about how an IBM acquisition of Sun
could help the open-source community.
"In these economic times we need innovation," Black said. "A
competitive marketplace boosts innovation. We do not need 'companies too big to
fail' at the center of our critical digital infrastructure. The impact of such
a deal on competition and the price consumers pay for tech products would be
far-reaching and deserves careful review by antitrust authorities."
That would be familiar territory for mighty IBM,
a longtime target of antitrust officials and rivals in the United
States and overseas. In 1969, IBM
was hit by an antitrust lawsuit by the Department of Justice claiming the
company was attempting to monopolize the business computing market. The case
was eventually settled in 1983.
IBM is currently facing an antitrust
investigation in Europe over its mainframe business
practices, and the company bought PSI (Platform Solutions) to end several
antitrust lawsuits involving IBM's
relationship with PSI. IBM also faces an
antitrust investigation by the European Union after one of its still-standing
mainframe competitors, T3 Technologies, filed a formal antitrust complaint
against IBM in January.
"This potential merger has the attention of many tech companies and others
who might wind up with fewer choices in computer services," Black said. "We
expect it will be scrutinized by all who use tech products, and all who care
about a competitive, innovative business environment and its role in the
economy."