IBM’s Acquisition of HashiCorp Investigated by UK Competition Authority

The British government is investigating whether IBM acquires cloud infrastructure company HashiCorp It will lead to “a significant reduction in competition” within the country’s market.

IBM announces intention to acquire HashiCorp $6.4 billion In April 2024, help it support customers’ growing artificial intelligence-related needs. HashiCorp offers hybrid and multi-cloud lifecycle management products such as infrastructure-as-code tools terrainwhich helps build and run artificial intelligence applications.

HashiCorp will operate as a division of IBM Software rather than being merged into IBM’s open source subsidiary Red Hat. The company said the deal will help its products reach a wider audience.

Competition and Markets Authority Notify both companies of upcoming Phase 1 investigation The case will be filed on August 1, 2024 and officially launched on December 30. A preliminary decision will be made before February 25 whether to conduct a comprehensive investigation. Relevant third parties can submit opinions before January 25.

IBM declined to provide further comment. TechRepublic has reached out to HashiCorp for response.

IBM, HashiCorp deal draws criticism

IBM has faced challenges since the acquisition was announced, with the U.S. Federal Trade Commission reviewing it for potential antitrust issues.

look: Ansible vs Kubernetes | DevOps Tools Comparison

IBM stock Down about 9% The announcement came shortly after first-quarter total revenue, released simultaneously, fell short of the London Stock Exchange’s forecast of $90 million.

Conversely, HashiCorp shares gained 4% after suffering a sharp decline in 2023. Relicensing Terraform from open source Apache 2.0 Stricter commercial source license. This alienated parts of the open source community, who forked the original Terraform code into the open source OpenTofu and placed it under the supervision of the Linux Foundation.

Additionally, in June, HashiCorp investors sue the companyclaiming that the IBM acquisition brought benefits to board members that outweighed those of shareholders. The executives will allegedly receive substantial personal benefits from the transaction, such as certain “golden parachutes” and convert their large holdings of illiquid stock into cash.

The plaintiffs allege that such incentives created a conflict of interest, causing the board to favor an IBM acquisition over potentially more lucrative opportunities for shareholders and potentially reducing the value of their investments. However, this outfit is mysterious flinching Two days later.

There is no level playing field in the UK cloud market

In October 2023, telecoms regulator Ofcom identified various issues in the UK cloud market that pose challenges for businesses and consumers, including The dominance of Amazon and Microsoft. Microsoft’s Azure and AWS account for 70% to 80% of the UK cloud services market, while Google Cloud only accounts for 10%.

One of the most pressing issues is the cost of migrating data from cloud platforms. This cost barrier prevents customers from switching between cloud providers, stifling competition in the industry.

look: Microsoft, OpenAI partnership attracts attention from UK antitrust regulators

Shortly after these results were released, the CMA Start investigating the issue raised. These results – along with any potential remedies for anti-competitive conduct – are expected to be published later this month.

Synopsys and Ansys merger likely to gain approval

On December 20, the CMA completed the first phase of its investigation into chip design software supplier Synopsys’s $35 billion acquisition of simulation software company Ansys. it represents self Broadcom acquires VMware $69 billion 2023.

The CMA found that the merger had the potential to significantly reduce competition in the chip design and light simulation markets, but may still approve the merger if the companies submit acceptable mitigating measures.

Synopsys and Ansys compete in three key areas. The first is register transfer level power analysis, which evaluates the power requirements and usage of the die. The other two are optics and photonics software, both used to design and model light-related products such as camera lenses, television monitors, car headlights and lasers.

Merging these companies may reduce product choices in these three areas, as they will become market leaders and smaller companies will have difficulty competing. “This could lead to a loss of innovation, reduced software quality and/or higher prices, which could then be passed on to UK businesses and consumers,” the CMA said in its statement. Press release.

look: UK regulator investigates Apple mobile browser dominance

The CMA also suspects that the deal will allow Synopsys and Ansys to limit the interoperability of their products in order to maintain their dominant position. However, the investigation found that this element was so important to their customers that they would switch providers if it was compromised, so they had no incentive to do so.

Synopsys announced the deal In January 2024, it stated that it hopes to combine its expertise in electronic design automation with Ansys’ expertise in simulation to expand its influence in the field of wafer to system design. Ansys accepted the deal to accelerate its growth and provide more integrated solutions to customers. The two have been working together for many years now.

If the companies do not propose appropriate mitigating measures by December 31, 2024, the competition authority will conduct a more in-depth second phase of the investigation. However, Synopsys said in a statement that it “has taken steps to address all concerns raised by the CMA”. Published response. One of the steps is its commitment Sells its optical solutions business Once the Ansys acquisition is completed, it will be transferred to another company.

The merger is reportedly expected to receive approval from the European Commission Reuters. Sources added that Synopsys will provide the CMA with the same remedies it uses to address EU competition concerns

“Together, Synopsys and Ansys can help drive innovation across industries by meeting the rapidly growing customer demand for system design solutions that provide deeper integration of EDA and simulation and analysis (S&A) software,” a Synopsys spokesperson said.