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August 9, 2017

Cloud treachery! IBM sues ex-CIO looking to join rival AWS

Is this tense situation a reflection of the race going on to secure dominance in the crowded cloud space?

By Tom Ball

IBM has slapped a lawsuit on its former Chief Information Officer who was looking to jump ship and head to cloud rival AWS.

The argument from IBM is that Jeff Smith, the former CIO of the company, is bound by a one-year non-competition agreement in which joining the likes of AWS would be forbidden.

Not only this, the complaint that has been issued by IBM also alleges that the ex-CIO has revealed important cloud information to the CEO of AWS.

IBM filed an official complaint against Smith at the US district court in New York, saying that the former Big Blue exec

“threatens to violate his one-year non-competition agreement by going into direct competition with IBM as a senior executive of Amazon Web Services, one of IBM’s main competitors in cloud computing.”

The reaction from IBM comes at a critical time, as it is planning to release a new IBM cloud next year. Obviously, the leak of any information pertaining to the launch, especially to rivals, could impact Big Blue commercially and competitively.

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The complaint elaborates further on this, saying: “The IBM secrets that Smith threatens to take to IBM’s competitor are so sensitive that he was instructed to retain copies of written project presentations… Smith shared inside IBM information with the CEO of AWS, Andrew Jassy, while Smith was serving as a trusted IBM executive.”

Big Blue has experienced difficulty in achieving the agility necessary to achieve dominance in the cloud space largely due to it being weighed down by its outdated, legacy business.

READ MORE: IBM share price suffers after revenue falls for 21st consecutive quarter

Financial results for IBM have reflected the challenge the tech giant faces in taking on some of its more maneuverable opponents. Recent results marked the 21st consecutive quarter that the company has experienced a decline in revenue.

Another indicator of IBM’s position came when Berkshire Hathaway sold off a third of its massive stake in the company, as long time IBM faithful, Warren Buffet, even losing hope in the success of Big Blue.

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