T3 Technologies Inc, once the world’s second-largest IBM mainframe systems integrator, filed a formal 500-page antitrust complaint with the European Commission Tuesday charging IBM with shutting it out of the market.
T3, which sued IBM in New York over a year ago seeking to break Big Blue’s mainframe monopoly, threatened last summer to take its case to the EC. It hired the Brussels office of the London-based law firm of Berwin Leighton Paisner to prepare and file the complaint. It also assembled expert witnesses who submitted reports and documentation to the EC along with it.
The complaint, kept secret by EC tradition, alleges a history of IBM abusing its monopoly. It accuses IBM of preventing competitors from selling rival mainframe hardware by tying the sale of its operating system to its own mainframe hardware and withholding the patent licenses and IP that IBM had pledged to the United States government would always be available to rivals for a reasonable royalty.
Because of that undertaking, the 1956 consent decree that IBM operated under – practically from the dawn of the computer era – was finally phased out in 2001.
Since then, T3 says IBM has been squeezing out any and all mainframe competitors to secure its monopoly, eliminating the licensing programs that would let customers buy its mainframe software and run it on non-IBM mainframe hardware.
T3’s allegations echo those lodged by wannabe mainframe maker and T3 partner Platform Solution Inc (PSI), which filed a massive antitrust countersuit against IBM in 2007 and also complained to the EC.
IBM dealt with the PSI threat by buying the company last July presumably for hundreds of millions of dollars.
The EC claims the investigation it started when PSI complained continued on its own initiative after PSI withdrew its allegations last summer.
How active that probe has been is debatable. T3 says it has designed its complaint, stronger on the face of it than anything PSI could muster, to be slam dunk.
Being a start-up, PSI had no business of its own, particularly no business of its own in Europe, and the five z/OS-running Itanium-based machines that it managed to get to market before disappearing into IBM’s giant maw got there complements of T3.
T3 also has a historical business in Europe, where – before its relations with IBM went bad – it derived a third of its business. It continues to support 200 customers in Europe that still use its low-end mainframes, systems that are smaller and cheaper than IBM sold, though it had to abandon its offices in the UK and Italy and plans to open a facility in Germany.
One of T3’s expert witnesses reckons that Europeans could save $48 billion over 20 years if the mainframe market was open to competition.
In a statement T3 president Steven Friedman said observers should get over the notion that the mainframe market is shrinking. IBM’s mainframe business was up 25% in Q3 and about 25% of its annual $100 billion in revenues and 40% of its profits come from mainframes.
“The machines,” Friedman says, “remain essential to the operation of just about every industry including manufacturing, banking, healthcare, retail and government. In the past, companies such as Amdahl, Hitachi, Comparex, PSI and T3 used to compete in the mainframe market. However, through a calculated set of actions, only IBM now offers IBM-compatible mainframes and, based on IDC reports, controls over 99% of all existing IBM-compatible mainframes in use today.”
IBM itself calculates that 80% of all corporate and government data lives on mainframes and the value of legacy COBOL-based mainframe applications is believed to be somewhere between $1 trillion and $5 trillion. Nobody can afford to rewrite the applications to run on different machines so access to IBM’s mainframe operating systems is crucial.
T3 has also launched a web site to lay out its case and focus a spotlight on IBM’s methods. It wants the site to be a rallying point for other people’s complaints about IBM. T3, by the way, timed its EC submission to coincide with IBM’s Q4 results.
See www.OpenMainframe.org.
Sensing an opportunity to bedevil IBM, which helped the EC convict Microsoft of antitrust violations – and so makes the EC’s dispassion suspect – Microsoft has basically been running guns to Big Blue’s enemies.
It bought a piece of T3 in November ostensibly to “help fund the ongoing development of new solution offerings to assist mutual customers” and it was part of a $37 million infusion into PSI supposedly for the same kind of reason. The size of the T3 investment has not been disclosed.
Prosecuting an antitrust case is an expensive exercise, especially when you’ve allegedly been run out of business.
T3’s US antitrust case against IBM is scheduled to go to trial this summer. If the drama plays out as it usually does, it will never get to the jury.