UK Watchdog to Review IBM’s $6.4 Billion Acquisition of HashiCorp

The United Kingdom’s Competition and Markets Authority (CMA) has launched an inquiry into International Business Machines’ (IBM) proposed $6.4 billion acquisition of HashiCorp, raising questions about the deal’s potential impact on competition in the cloud services market. According to The Wall Street Journal, the CMA is inviting public feedback on the merger until January 16, 2025, as it evaluates whether the acquisition warrants a deeper investigation.

In its announcement on Monday, the CMA disclosed that it has set a provisional deadline of February 25, 2025, to determine if the deal should proceed or if it requires a more extensive Phase 2 review. However, the authority noted that a decision could come sooner, depending on the progress of its assessment.

Cloud Market in Focus

The CMA’s scrutiny of the merger aligns with its broader examination of the U.K.’s cloud services sector, which has seen increasing regulatory attention in recent years. The Wall Street Journal  reported that in 2023, telecommunications regulator Ofcom recommended referring the U.K. cloud market to the CMA for competition review, citing concerns about market dominance and unfair practices among major players. This ongoing focus has now extended to IBM’s attempt to acquire HashiCorp, a prominent provider of cloud provisioning and infrastructure management tools.

Related: UK’s CMA to Review IBM’s $6.4 Billion Acquisition of HashiCorp

While regulatory hearings in the cloud sector have often spotlighted disputes between industry heavyweights like Microsoft and Amazon Web Services (AWS), the CMA’s focus on IBM’s deal underscores the authority’s commitment to scrutinizing consolidation in the tech industry.

Previous Notification and Context

This latest development follows an earlier notification in August 2024, when IBM and HashiCorp were informed by the CMA about the initiation of a Phase 1 review. The Wall Street Journal noted that the timing of the CMA’s inquiry suggests potential complexities in the merger, even though such notifications are a standard part of the process.

The CMA’s decision to probe the IBM-HashiCorp deal was not unexpected, given the regulator’s active role in maintaining competition in fast-evolving sectors like cloud computing. As The Wall Street Journal highlighted, IBM’s acquisition of HashiCorp could have significant implications for the competitive landscape, prompting the watchdog to evaluate whether the merger might stifle innovation or harm consumer choice.

Next Steps and Industry Reactions

Interested parties have until mid-January to submit their comments, after which the CMA will decide whether to escalate the investigation. The regulator’s eventual ruling could have ripple effects across the cloud industry, potentially influencing how similar deals are approached in the future.

Source: The Wall Street Journal