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Venture

Robert Trigaux

Tiny Tampa's T3 argues antitrust vs. IBM

20

January

Wake up and good morning. Maybe it's coincidence, but isn't it interesting that a tiny private Tampa company that deals in mainframe computers (remember mainframes?) is filing an antitrust complaint (remember those?) in Europe today -- inauguration day for a new president in the White House -- against formidable computer services giant IBM. T3 Technologies, based at 1408 N. Westshore Blvd. in Tampa, claims IBM boxed it out of the market by refusing to sell its customers the operating software to run its machines.

Talk about David and Goliath. Here's what T3 President Steven Friedman says in a statement today:

"For decades, IBM licensed its system software and intellectual property to other computer manufacturers. However, for no reason other than to remove all competition from the mainframe market, IBM eliminated programs to allow customers to buy its mainframe software for use on non-IBM mainframe solutions. It also used legal threats and anti-competitive actions to shut down competitors such as T3..."

The complaint asks European Union regulators to investigate a legal battle already brewing in the United States. As reported today in the Wall Street Journal (subscription required), European Union regulators used similar legal principles in charges made against Microsoft Corp. last week. Microsoft has said it is studying the charges and committed to "full compliance" with European law.

T3 Technologies had between $10-million and $20-million in annual sales until 2006, Friedman said. But late that year IBM stopped licensing technology to a key T3 supplier, and stopped selling operating-software licenses to T3 customers, Friedman contends. His sales collapsed.

Antitrust claims and IBM have a long history together. Many companies trampled by IBM have claimed they were unfairly squeezed out of the mainframe market. Friedman's contentions freshen that theme: 

“Despite reports in the press that the mainframe market is shrinking, nothing could be further from the truth. The mainframe market is not only vibrant but growing. The mainframe remains essential to the operation of just about every industry including manufacturing, banking, healthcare, retail and governments.

"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 percent of all existing IBM-compatible mainframes in use today.”

T3 Technologies was formed in 1992. In November 2008, T3 said Microsoft had invested in the company. Last summer, T3 did some saber-rattling in a news release saying it was preparing a formal complaint against IBM's alleged antitrust practices.

Some key background: In 2001, the U.S. Department of Justice dissolved a 49-year-old consent decree IBM had signed which kept tabs on its business practices. Justice said IBM had proved itself by supporting open systems. But less than a year later, T3 claims, IBM met with T3's Friedman and demanded, in effect, the company stop selling IBM-compatible mainframes using another firm's software. T3 refused and IBM responded by terminating its mainframe licensing agreement with the company at the end of 2002. There's a good history of this here in a computer industry trade publication.

With some rare exceptions -- like the Whole Foods purchase of Wild Oats in the organic food business -- antitrust oversight during the two-term Bush administration has been virtually non-existent. While it's obviously early to measure the Obama administration's interest in antitrust regulation, the new president clearly has indicated his team will be more aggressive regulators of all things business.

Helping the little guys, like T3, against a heavyweight, like IBM, could fit the bill. On the other hand, Obama's Justice Department may prove skittish in pushing any corporation around in the midst of one very nasty recession.

-- Robert Trigaux, Times Business Columnist

[Last modified: Tuesday, June 1, 2010 12:23pm]

    

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