UK regulator launches probe into IBM’s $6.4 billion acquisition of HashiCorp
The UK’s Competition and Markets Authority (CMA) has launched a preliminary investigation into IBM’s planned $6.4 billion takeover of HashiCorp, citing concerns that the deal could stifle competition in the cloud services market.
Announced last April and approved by HashiCorp stockholders in July, the merger would see the San Francisco-based cloud infrastructure and security firm operate as a division of IBM Software. While both companies have highlighted the deal as an opportunity to accelerate innovation, regulators fear it could have broader implications for competition in the rapidly evolving cloud computing sector.
Call for comments and timeline
The CMA has opened a call for public comment, set to close on 16 January 2025. It will then escalate the investigation to a more detailed phase 2 inquiry by 25 February 2025.
“We are concerned the merger may lead to a substantial lessening of competition in the cloud services market,” the CMA said in its announcement.
About HashiCorp
Founded in 2012 by Mitchell Hashimoto and Armon Dadgar, HashiCorp provides tools that help enterprises manage their cloud infrastructure and security. Its offerings, such as infrastructure lifecycle management and security automation, support hybrid and multi-cloud environments. The company serves more than 4,400 clients, including 85% of Fortune 500 companies, with notable names such as Bloomberg, GitHub, Starbucks, and JP Morgan Chase among its customers.
At the time of the merger announcement, Dave McJanne, HashiCorp’s CEO, emphasized the strategic alignment between the two companies saying, “By uniting two leading technology businesses with complementary visions, this transaction provides an incredible opportunity to accelerate HashiCorp’s mission.”
CMA’s focus on cloud competition
This investigation comes as part of the CMA’s broader scrutiny of the UK’s cloud computing sector, following concerns raised by Ofcom about limited customer flexibility and choice. A 2023 Ofcom report criticized market practices such as egress fees, software licensing restrictions, and technical barriers that hinder multi-cloud setups and switching providers.
The report specifically highlighted the dominance of major players like Amazon Web Services (AWS) and Microsoft Azure in the UK cloud market.
With the recent probe, CMA is worried if the HashiCorp merger proceeds without intervention, it could further strengthen IBM’s position in the cloud space, potentially impacting smaller competitors and customer choice.
As public stakeholders continue to forward their views on the merger, we can only wait and see which turn the case takes.
