The UK Competition and Markets Authority (CMA) is set to initiate a phase one investigation into IBM’s previously announced acquisition of HashiCorp, valued at $6.4bn. HashiCorp disclosed in an 8-K filing with the US Security & Exchanges Commission that it received a notification last week from the regulatory body concerning this review. Listed on the Nasdaq, HashiCorp specialises in multi-cloud infrastructure automation, a sector under increasing scrutiny by competition watchdogs. The announcement comes amid an ongoing investigation by the CMA on the recommendation of fellow regulator Ofcom into the state of competition within the overall UK cloud market.
In its market study, Ofcom pinpointed several market features that complicate the ability of customers to switch or use multiple cloud suppliers. Issues such as egress fees, loyalty discounts, and technical barriers have been identified as significant impediments to competition in the cloud services market. Reflecting on these market dynamics, the CMA’s Annual Plan for 2023 to 2024 prioritised ensuring effective competition in digital markets, particularly in light of the Digital Markets, Competition and Consumer Bill. This ongoing investigation into cloud services is set to play a crucial role in shaping the competitive landscape of the UK’s digital markets, with the CMA expected to conclude its findings by April 2025.
HashiCorp deal seen as enhancing IBM strategic growth areas
IBM and HashiCorp’s deal was signed in April 2024 and is expected to be finalised later this year. As per the agreement, HashiCorp’s shareholders will receive $35 per share. The deal aims to develop a comprehensive, end-to-end hybrid cloud platform, underscoring IBM’s strategy to expand its capabilities in this area.
HashiCorp’s suite of products includes tools for infrastructure lifecycle management and security lifecycle management. It enables organisations to automate their hybrid and multi-cloud environments, critical for scaling modern IT infrastructure. The acquisition also aligns with IBM’s ongoing commitment to invest in hybrid cloud and artificial intelligence (AI), technologies viewed by the firm as critical for its future growth.
Indeed, absorbing the firm is expected to significantly enhance IBM’s strategic growth areas such as data security, IT automation, and consulting. The merger, which integrates Red Hat’s Ansible Automation Platform with Terraform’s capabilities from HashiCorp, is anticipated to simplify the provisioning and configuration across hybrid cloud setups.
In June, HashiCorp expanded its HashiCorp Cloud Platform (HCP) into Europe, beginning with HCP Terraform. This European launch introduces a unified platform that consolidates the firm’s products, intending to enhance both its infrastructure and security lifecycle management solutions.
The launch includes significant improvements designed to foster developer potential while managing cloud costs and risks globally. HCP is now available in Europe, hosted in data centres located in Ireland and Germany. This expansion offers local data residency to satisfy security and compliance demands, enhances service performance for regional applications, and aims to reduce operational expenses for platform teams.
HCP Terraform, previously known as Terraform Cloud, integrates seamlessly into the HCP to provide a cohesive product experience across HashiCorp’s suite. The transaction has received approval from HashiCorp’s shareholders and is now pending further regulatory clearances and customary closing conditions, with completion expected by the end of 2024.
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