IBM Faces UK Scrutiny Over HashiCorp Acquisition

The UK Competition and Markets Authority (CMA) is investigating IBM's acquisition of HashiCorp to assess potential anti-competitive impacts within the UK cloud market. IBM announced a $6.4 billion deal to acquire HashiCorp, with expectations to boost its AI capabilities. Post-acquisition, HashiCorp is expected to operate as a division within IBM Software. This investigation is a part of CMA's Phase 1 probe, with decisions regarding a full-scale investigation due by February 25, 2024. The acquisition has faced scrutiny not only in the UK but also in the US, with the Federal Trade Commission reviewing the deal for antitrust concerns. The deal has prompted a varied reaction in the stock market, with IBM’s shares declining and HashiCorp’s seeing a modest rise. Additionally, an investor lawsuit against HashiCorp was withdrawn, which alleged conflicts of interest favoring board members in the IBM deal. Meanwhile, the UK cloud market faces criticism over the dominance of Microsoft’s Azure and Amazon’s AWS, representing significant market share, raising concerns about competition and client switching costs. In a parallel development, the CMA has completed its investigation into the $35 billion merger between Synopsys and Ansys, addressing potential impacts in the chip design and simulation markets. If deemed mitigated adequately, the merger is likely to proceed, with Synopsys having committed to business adjustments to alleviate competition concerns.