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EU still greasing IBM antitrust probe despite PSI withdrawal

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IBM may have corked the wails of antitrust outrage coming from the diminutive mainframe vendor Platform Solutions (PSI) by purchasing the upstart, but the European regulator genie has already slipped out the bottle.

The rival firm's legal fight in both the US and Europe over Big Blue's mainframe monopoly came to an abrupt close yesterday when it accepted an undisclosed sum of money to sell out to its massive adversary. As part of the acquisition, PSI dropped all antitrust complaints. IBM was equally obliged to toss away a copyright infringement lawsuit against PSI for doing business selling servers that run IBM mainframe software on non-IBM hardware.

The European Commission, however, doesn't share the let-bygones-be- bygones attitude on the matter.

"PSI withdrew their complaint yesterday morning, but the Commission is continuing to look at competition in the market concerned," said an EC spokeswoman to El Reg.

The look shouldn't take long. The only mainframe firm of note left standing is T3 Technologies. And the firm announced Tuesday — a day ahead of when the acquisition of PSI was announced — that it plans to lodge a formal antitrust complaint with the EC for good measure. It's safe to assume T3's preemptive action comes from its close relationship with PSI rather than foresight. As El Reg has noted, PSI is friendly enough to write press releases for T3.

IBM spokesman Fred McNeese said the company has no comment regarding the continued EC scrutiny and T3's threat of filing a new complaint.

Big metal fallout

So does the purchase of PSI — a mere blip on the radar when compared with the mainframe armada that is IBM — really make a difference?

"This is a black hole acquisition," said Computer & Communications Industry Association president Ed Black in a statement. "It sucks the life out of the market and destroys the matter. It is transforming a market with latent potential for competition and innovation into a sector with little prospects for anything but complete domination of IBM."

Mainframe analyst Phile Payne disagrees on the significance of PSI as true competition to Big Blue.

"Simply (and it's VERY simple), the PSI business model didn't fly. Not viable. Irritation value only. The company could never have made a profit — there simply isn't enough margin in the (scarce) mainframe deals," he said.

The best solution would have been for PSI to be acquired by Hewlett-Packard, according to Payne. That was in fact a possibility for PSI, but when IBM first filed its patent infringement lawsuit against the company, HP turned tail and scooted from the bargaining table.

Meanwhile, IBM says snatching up one of its last mainframe competitors shouldn't raise antitrust red flags because there are alternatives to big metal.

"We believe there is plenty of competition to the mainframe in various other platforms," said McNeese.

In other words, voyage elsewhere mainframe vendor hopefuls. Here be dragons. ®

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