DOJ Investigating IBM Mainframe Business: Report

Federal antitrust regulators reportedly are investigating IBM's dominance in the mainframe business, which has long been the target of complaints from others in the industry. According to the report, the DOJ has notified at least one IBM critic that it was opening an investigation. One industry group has accused IBM of using punitive measures against competitors in the mainframe space.

Federal regulators reportedly are investigating IBM for possible antitrust violations in connection with its mainframe business.

MarketWatch reported Oct. 7 that the Computer & Communications Industry Association, an industry trade group that has often complained about IBM's dominance in the mainframe space, and association member T3 Technologies had confirmed that T3 had received a civil investigation demand from the Department of Justice in relation to IBM's mainframe business.

T3, a 15-year-old company that makes IBM-compatible mainframe alternatives for small and midsize data centers that run mainframes, has been a vocal critic of IBM, earlier this year filing an antitrust complaint about Big Blue with the European Commission.

T3 reportedly sued IBM two years ago over its market dominance, though the suit apparently was dismissed.

A CCIA spokesperson said the association in September presented a whitepaper to the DOJ outlining its complaints against IBM, saying it has a history of punishing other companies in an attempt to keep its dominance.

An IBM spokesman was quoted as saying the company would cooperate with any DOJ requests.

IBM is the dominant force in the mainframe space it created five decades ago, though others-such as Unisys-also sell the massive systems, and a host of software vendors, including BMC Software and CA, sell solutions around managing mainframes.

Analysts a decade ago were predicting the demise of mainframes with the rapid growth of smaller and increasingly powerful x86 servers. However, the mainframe business has remained strong, and IBM has aggressively expanded the reach of its Series z systems. IBM has created specialty engines designed to enable the mainframes to better run Linux and Java workloads, and has created smaller, more cost-effective systems aimed at midsize enterprises.

IBM also has pitched the mainframes as alternatives to the larger Unix systems from the likes of Hewlett-Packard and Sun Microsystems, which is in the process of being bought by Oracle.

Oracle is among the members of the CCIA, as is Microsoft and chip maker Advanced Micro Devices.

The DOJ investigation comes at a time when regulators here and abroad are taking a close look at antitrust issues around large technology vendors. The European Commission, the antitrust arm of the European Union, in May fined Intel $1.45 billion for its anti-competitive practices aimed at hindering competition from AMD.

Around the same time, the Obama administration revoked an antitrust policy established under President Bush that regulators said hindered the government's ability to fight anti-competitive behavior by companies.