Microsoft buys stake in IBM accuser

Microsoft has made an investment in TurboHercules, a small French software company whose complaint of anticompetitive business practices against IBM helped to stir up a European investigation into the US computer group.

News that the world’s biggest software company has backed a company at the centre of a dispute involving a rival is likely to be watched with interest in Brussels, given a wider pattern that has emerged in investigations involving the technology industry.

Other small tech companies or trade groups which launch antitrust complaints often have links to the industry’s biggest players.

TurboHercules accused IBM of illegally “tying” its dominant mainframe operating system to mainframe hardware, making it impossible for other companies to sell technology to the large installed base of customers for IBM’s mainframe machines. The complaint led Brussels to open a formal inquiry into suspected abuse of a dominant position by IBM this year.

Microsoft sought to depict its investment as a natural alliance. “Microsoft shares TurboHercules’ belief that there needs to be greater openness and choice for customers in the mainframe market,” it said. “Customers tell us that they want greater interoperability between the mainframe and other platforms, including systems that run Windows Server. For that reason, we continue to invest in companies like TurboHercules to develop new solutions for our mutual customers.”

The move echoes investments Microsoft has made in companies that have become thorns in IBM’s side. For instance, T3, which complained about IBM’s behaviour in the mainframe market, also had Microsoft as an investor. The software company also put money into PSI, which complained to Brussels over the mainframe market, though it was eventually bought out by IBM.

In another current case, three complaints were made about Google’s behaviour in the online search market. One came from a company owned by Microsoft and another from a member of a trade group in which Microsoft has a strong hand.

But complaints about Microsoft’s behaviour in the browser market – investigated at length by Brussels – were also backed by a different trade group which counted IBM and Oracle among its members.

Microsoft’s investment was announced by TurboHercules, set up to market open-source mainframe “emulator” software, allowing mainframe applications to run on non-IBM hardware. It said Microsoft’s funding was its first “outside investment” although it says it hoped to bring in other investors.

IBM denies acting illegally in the TurboHercules/T3 case, and said it was entitled to defend its intellectual property.