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40 Years of Regulations: United States vs. IBM

The Justice Department finally concluded, on the 30th. of April, the case on anti-monopoly regulations to which IBM was subject during 40 years. The restriction in the personal computer area, work stations, services and system integration was finally lifted last year. It all started with a demand in 1957, in which IBM was accused of taking advantage of its dominant position in the market of tabulating machines. The government won the case, and it was resolved to establish anti-monopoly regulations against IBM. Although at first it referred to tabulating machines, as computers replaced them, the regulations were modified in order to include the computers.

With time, technology surpassed the regulations. In the 80s, IBM, without meaning to do so, stimulated the personal computer market which, in the end, would make them loose their dominant role in the world of computers but, at the same time, would help them shake off the government restrictions. So, when IBM developed its own personal computer, it did so as an answer to the rise of new and small businesses like Apple and Tandy. IBM never thought this to be an interesting market. Therefore, instead of developing its own system, it went out to buy existing technology. This one decision is responsible for the exponential growth in the personal computer market in the following decade.

Fifteen years later, the personal computers changed the world so greatly, that the Justice Department recognized that regulations had no more reason to exist. All regulations have now been abolished, with the exception of those pertaining to mini-computers AS/400 and the mainframes of System 390.

It is now up to the Court of New York to decide on the future of IBM, which no longer means the future of computers, as it could have been 40 years ago. Would IBM have had a monopoly on the computer market? If regulations were effective, why is it that after 40 years IBM still holds a large percentage in the mainframe market?

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June, 1997