Neon, TurboHercules, T3 Drop EU Complaints Against IBM

The three companies had accused IBM of anti-competitive practices relating to its mainframe business. European regulators did not say whether they would drop their investigations.

Three companies that had accused IBM of anticompetitive behavior in its mainframe business are dropping the complaints they had filed with the European Union.

According to a recent regulatory filing by IBM, two of the companies-T3 Technologies and Neon Enterprise Software-either have or will withdraw their complaints with European regulators. Meanwhile, officials with a third company-TurboHercules-said Aug. 3 they were no longer pursuing their complaint against IBM and its mainframe business.

IBM officials declined to comment on the issue.

The news comes more than two months after Neon officials said they had settled their legal disputes with IBM and were taking their zPrime product off the market. Neon's software, which enables users of IBM's System z mainframe systems to shift more workloads onto specialty processors, was the key point of contention in the dispute between the two companies, and Neon's decision to take the software off the market was a significant win for IBM.

Both T3 and TurboHercules also offered technology designed to make it easier for businesses to run their mainframe workloads on non-IBM systems.

The complaints filed by the three companies kicked off at least two EU investigations into IBM's mainframe business practices. European regulators were noncommittal about whether they would continue the investigations in light of the complaints being dropped. T3 and Neon also had filed complaints with U.S. regulators.

Essentially all the complaints were the same: They accused IBM of antitrust behavior regarding its mainframe business, saying the tech giant used its dominant position to unfairly hurt their companies by tying their System z machines to its mainframe operating systems. IBM officials argued that the companies' products violated IBM patents and, if used, would cause mainframe customers to violate the terms of their licensing deals with IBM. The smaller companies essentially were trying to make money off the billions of dollars IBM had invested in the mainframe business, Big Blue officials said.

In addition, IBM accused competitors-in particular, Microsoft-of backing the regulatory complaints for competitive reasons.

Despite the contention among some industry observers that mainframe systems were being squeezed out by the rise of more powerful x86 systems, IBM's System z servers continue to be an important part of IBM's hardware portfolio. In the second quarter, IBM's System z mainframe revenues rose 61 percent over the same period last year, while MIPS jumped 86 percent.

The products put forth by T3, Neon and TurboHercules were designed to help businesses continue to run their mainframe workloads, but for less money. Neon's zPrime software lets companies move more of their System z applications off the mainframes' expensive central processors and onto less costly IBM specialty engines.

Meanwhile, T3 makes non-mainframe systems that can run mainframe applications, while TurboHercules' emulation software-based on the open-source Hercules technology-enables businesses to run their mainframe applications on less costly servers, including mainstream x86 systems.

Neon in 2009 sued IBM, and IBM later counter-sued. In May, Neon officials announced they had settled their legal disputes with IBM and shelved zPrime. A U.S. District Court judge earlier had ruled that only those workloads that IBM allowed could run on the specialty engines and that System z customers using technology like zPrime were violating their licenses with IBM.

The IBM settlement does not impact any other Neon products other than zPrime, Neon officials said.