The Corner Newsletter: The Lessons from IBM’s Long-Lived Monopoly (September 22nd, 2026)
Welcome to The Corner. In this issue, we explore how IBM’s stranglehold over mainframe computing, built up over decades, offers a cautionary tale for today’s monopolies in cloud and AI technologies.
The IBM Mainframe Monopoly: a 60-Year-Old Cautionary Tale for Cloud and AI
George Colville
Earlier this summer, an off-the-record meeting took place at the European Commission to discuss the control that Amazon, Microsoft and Google exercise over the data center and cloud computing industries. There, a senior leader of a major global bank took to the floor to bring up another tech infrastructure monopoly: IBM. He wanted to draw attention to the way some of the world’s biggest corporations are still hostage to what he called “the monopoly nobody talks about.”
In complaining about IBM’s exclusion from today’s monopoly debate, the banker also directed attention to one of the classic case studies about the dangers posed by tech monopolies, with very real implications for every business now subject to the power of the corporations that dominate today’s AI and cloud services. As regulators consider the increasingly concentrated power in cloud and AI, the IBM case stands as a sobering example of how harms can compound over time when regulators fail to act decisively.
Considered irrelevant by many today, IBM is far from it. Despite its diminished power relative to the wider tech sector, IBM’s control over mainframe computing is stronger than ever. In a market which used to be merely dominated by IBM, which held an 80% market share while a handful of competitors scrapped for the remaining 20%, it now controls close to 100% of the market and can dictate terms to even the biggest of global corporations.
Two-thirds of the Fortune 500, eight of the top 10 insurers, seven of the top 10 global retailers, and eight of the top 10 telecommunications companies, use IBM mainframes. Crucially, 90 of the top 100 banks, by IBM’s own count — depend on these mainframes for their core operations from transaction processing to credit card payments.
With three quarters of the world’s transactions passing through IBM mainframes, the corporation’s dominance is also a potential strategic chokepoint. In an era of growing geopolitical tension, hobbling a major national bank’s transaction infrastructure would prove economically catastrophic for an entire country.
IBM still enjoys a reputation for high quality, but customers say it has been allowed to perfect both technical and contractual lock-in over the decades, for instance by restricting customers’ ability to run its operating systems on alternative hardware. The corporation’s software licenses are structured both to maintain its monopoly over their business and then to squeeze them into paying extortionately high prices.
In the second half of the 20th century IBM faced more than 20 major lawsuits. Although one of these cases resulted in the corporation spinning off the technologies that made the personal computing revolution possible, none managed to break the corporation’s stranglehold over the mainframe industry.
Since the turn of the century, however, IBM has faced only one antitrust lawsuit, qnd its customers have largely stopped seeking other regulatory actions. This does not mean that the corporation is acting benevolently. On the contrary, in antitrust cases, fear of retailiation routinely leads potential plaintiffs to decide not to initiate suits, which in turn puts the responsibility on law enforcers.
One big reason for IBM’s continued power is that the corporation structured its proprietary software stack in ways that generate lock-in. File formats, protocols, and system architecture are built to tie hardware and software together tightly and to offer minimal interoperability. Internal expertise becomes tailored to its proprietary technologies, leaving companies’ entire systems — from code to data, to human resources — locked in.
Another key mechanism of control is decades-old legacy code — often in old languages like COBOL and written by long retired programmers. When they are built into proprietary systems, these become woven so deeply into core operations that untangling them is a multi-year undertaking. Databases and software systems built up over half a century grow too large and complex to migrate without risking the operations they support. If cloud and AI technologies remain closed and proprietary as IBM mainframes have done, this pattern will repeat.
The European Commission investigated precisely these practices in 2010, then extracted behavioral commitments a year later. Yet more than 15 years on, IBM’s position is only more dominant.
As Open Markets has argued in Engineering the Cloud Commons and Stopping Big Tech from Becoming Big AI, today’s dominant cloud and AI corporations pose a wide variety of new and sometimes terrifying political, economic, and systemic threats.
As the IBM story makes clear, they also threaten a reprise of something far more familiar. The difference is that today’s cloud and AI technologies affect a far wider set of markets than IBM’s mainframes ever served.
Open Markets Institute Criticizes Weak Remedies Decision in Google Ad Tech Trial
Open Markets Institute executive director Barry Lynn this week blasted the remedies decision issued by Judge Leonie Brinkema in a landmark antitrust case brought against Google for its monopolization of the advertising technologies market. Lynn described the decision as an “embarrassing capitulation that essentially lets them determine their own punishment.” Judge Brinkema in April 2025 found the tech giant liable for monopolization on multiple grounds, Lynn said this week’s failure to direct Google to divest its ad exchange AdX “will lead to continued starvation of U.S. news publishers of the advertising revenues they have depended on since before the Founding.”
Open Markets legal director Sandeep Vaheesan published an article in Tech Policy Press on the toothless verdicts in Google’s two antitrust trials. “Despite being found to have broken federal antitrust law in two cases, Google generally gets to keep its unfair advantages in the market. As a result, in the words of a 1947 Supreme Court decision, in both cases, ‘the Government has won a lawsuit and lost a cause.’”
Lynn, in a separate statement, also made clear that the decision is far less damaging than it would have been a few years ago, because both the public and legislators are now much more aware of the dangers Google poses to our democracy, and better able to act legislatively in the near future.
Open Markets Europe to Cohost Conference, “Monopoly or Liberty?” in Paris on Sept 25
Open Markets Institute Europe will cohost a conference, “Monopoly or Liberty? How Monopoly Power Threatens France’s Democracy and Sovereignty and What to Do About It” in Paris on Friday, Sept 25, examining how concentrated corporate power and Big Tech is reshaping France and Europe — and what can be done about it. Leading regulators, political figures, economists, researchers and civil society leaders from France and across Europe will discuss the practical policies and political strategies that could distribute power more broadly. RSVP to the event here.
📝 WHAT WE'VE BEEN UP TO:
Open Markets Institute Europe submitted a policy brief to the European Commission calling for targeted reforms to the Digital Markets Act, covering bundling, self-preferencing, interoperability, and fair access to ensure the DMA can meaningfully challenge cloud concentration and support Europe’s digital sovereignty. The brief’s author, OMI Europe policy analyst George Colville, warned that while the DMA’s gatekeeper rules have now been applied to Amazon and Microsoft’s cloud businesses, the act was not designed to fully address the ways dominant cloud providers entrench their power. The policy brief received extensive coverage in POLITICO.
OMI Europe released a new position paper, written by policy and advocacy lead Giorgos Verdi, arguing that the EU’s Tech Sovereignty Package is a necessary step toward reducing dependence on U.S. digital infrastructure, but will fall short unless major loopholes are closed. The paper calls for stronger EU-level enforcement of cloud sovereignty rules, conditions on new data-center buildouts, binding open-source procurement requirements, greater semiconductor investment, and policies that prevent Europe from simply replacing foreign monopolies with domestic ones.
Open Markets Europe director Max von Thun spoke at an event in London hosted by the News Media Association titled “Time to Reset: Unlocking Growth & Sovereignty Through Digital Competition.” Discussing the failure of the UK’s new digital competition regime to live up to its potential so far, von Thun urged the new Burnham government to put taming Big Tech dominance at the center of its policy agenda.
In an article on private equity in childcare, Detroit Free Press quoted Open Markets industrial policy program manager Audrey Stienon on the lack of transparency in how much public funding is going to childcare rather than to private equity owners in the form of returns. “We can’t tell how much of taxpayer funds are going towards actual provision of services versus funds going back to managers and investors of these companies,” said Stienon, who co-authored Open Markets’s groundbreaking 2024 report on private equity in childcare.
Weekly newsletter What’s up EU named OMI Europe Director Max von Thun to its new Scientific Council, highlighting his work leading research and advocacy on the risks posed by concentrated economic power and his broader experience shaping economic policy in the UK and Europe.
Capital quoted Center for Media and Digital Governance director Courtney Radsch cautioning journalists against using AI in the editorial process. “The idea that we can use it in the creation and production of journalism, I think, is very problematic — because then what differentiates journalism from anyone else who uses an LLM to create content?” she said.
🔊 ANTI-MONOPOLY RISING:
The Justice Department is investigating Nvidia over its “nonexclusive licensing agreement” with AI chipmaker Groq, as antitrust regulators begin opening inquiries into such agreements — particularly in the AI industry — that previously evaded scrutiny. (New York Times)
The UK’s competition authority is probing the $65 billion deal between Britain’s Unilever and U.S. spice maker McCormick, which would combine brands such as Knorr, Hellmann’s, French’s, and Frank’s RedHot to create one of the world’s largest food companies. (Reuters)
Mexico’s newly established National Antitrust Commission opened its first antitrust investigation into domestic soccer after fans complained about the absence of a promotion and relegation system. The Mexican Football Federation suspended promotion in 2019 with an agreement to restore it by 2026, but it has not reinstated the system. (ESPN)
📈 VITAL STAT:
$7.85 Million
The amount Sony agreed to pay back to PlayStation users in the form of store credit after being accused of monopolizing the PlayStation digital game market. The company allegedly limited the sale of digital games on other marketplaces, forcing customers to buy them at a PlayStation Store. (New York Post)
📚 WHAT WE'RE READING:
Bytes and Bullets: Global Rivalries, Big Tech, and the New Shape of Modern Warfare — In his new book, technology and democracy expert Steve Feldstein recounts how powerful private companies, not government labs, are driving breakthroughs in new technologies, reshaping global competition in unpredictable ways and threatening democracy.