Brussels gives Big Blue green light for Red Hat buy

Red Hat

IBM’s borging of Red Hat is a virtual cert, after the European Union gave its blessing to the $34bn deal, and asserted it would “help facilitate a secure, open, hybrid cloud computing model”.

Big Blue CEO Ginny Rometty, last October, said the deal would make it the “undisputed number one in hybrid cloud”, a market she said would be worth $1tr next year. US authorities OK’d the deal in May. 

Brussels’ positive verdict was delivered yesterday, though its rationale might temper some of Rometty’s ambitions.

When it came to middleware and system infrastructure software, “The Commission found that the merged entity would continue to face significant competition from other players in all potential markets.”

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As for fears the deal would give either company undue leverage into neighbouring markets, and weaken competition, the commission concluded they wouldn’t have “sufficient market power” for this, and noted “as the success of Red Hat significantly hinges on its neutrality, any strategy impairing this neutrality would likely damage Red Hat’s business”. Likewise any attempt to restrict access to Red Hat’s source code, or unduly influence industry projects would attract an “adverse reaction”.

Indeed, the commission said it took note of the “pro-competitve rationale” of the acquisition, “In particular, IBM’s intention to use the complementary capabilities of Red Hat to further develop and offer open hybrid cloud solutions.” This would increase choice for enterprise customers by making it easier to shift workloads between on prem and multiple clouds.

Which we suppose means IBM can still be number one in the hybrid cloud.

Reassuring regulators is one thing. Now IBM faces the much tougher challenge of keeping Red Hat staffers – and customers – on side as the deal progresses. So far there has not a major exodus, however, Red Hatters are thought to be adopting a wait and see attitude, ready to pack up and go if IBM attempts to splash too much blue paint at its new property

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