Coming to Terms with Big Blue

Like a corporate Matterhorn, IBM casts a deep and daunting shadow across Western Europe's high technology. So powerful is IBM in Europe that it did more business there last year ($10.6 billion) than its nine largest rivals combined. But Big Blue's success has aroused European fears and suspicions. Nearly four years ago, the European Community brought the most ambitious antitrust suit in its 26-year history against the American firm. The key charge: IBM stifled competition by holding back technical information about its largest and most widely used family of computers, the System/370.

Last week, after months of negotiations, the two sides reached a landmark settlement. The Community suspended its case, and IBM agreed to make available information about its computers to enable rival companies to design equipment that can be linked to the System/370. The firm will disclose technical standards for new System/370 models within four months after they are announced, and it will publish an expanded manual of the system's communication codes.

The Europeans put pressure on IBM to be more open about its products because the American company is so huge and so pervasive that its decisions affect almost everything that happens in the computer field. At present, IBM makes close to two-thirds of the large computers used in Europe. One European Community official likened the information IBM will disclose to the details an automaker might provide tire manufacturers to make certain that their tires fit the wheels of the company's cars. IBM, for its part, was relieved to conclude the long-running dispute, which lifted a cloud from its European operations. IBM Chairman John Opel said the settlement satisfies the Community "without requiring us to make significant changes in the way we do business."

The disclosure of IBM standards could free Europe's computer makers from a trap of their own creation. Firms such as France's Bull and West Germany's Siemens have fallen behind U.S. and Japanese rivals partly because they have insisted on separate standards that have isolated their systems. Now access to IBM specifications will enable European firms to end their insularity by designing machines that communicate with IBM's.

Last week's action is likely to tie IBM more closely than ever to Europe's computer industry. The company provides about 100,000 jobs there, and last year it paid more than $1 billion in taxes, making it one of Europe's ten largest taxpayers. In a London speech last May, Opel promised substantial new investments after the suit was resolved.

To be sure, IBM had much to gain by settling the case. The company has wanted to show that it was abiding by Europe's business rules so that it could stay on the good side of officials. "Governments are our biggest customers," says Kaspar Cassani, president of IBM Europe, "and we have to demonstrate that we are good corporate citizens." After the U.S., Europe is the company's most important market, accounting for more than one-quarter of its 1983 revenues.

The settlement helped both Europe and IBM. Europe needs IBM's technology and financial might, and the U.S. firm needs its European market. Like the partners in a stormy but enduring marriage, each side knew that it would gain the most by staying on good terms with the other.