Unmasking the Digital Cartel: Are Predatory Tech Industry Practices Holding Your Company Back?

Predatory practices are all too common in B2B tech. Here’s how companies can win power back in their supplier relationships.

When does maintaining the status quo make sense for your business and when does it stand in the way of growth and progress?

It’s a question all companies must ask themselves if they want to stay competitive and relevant – and one that can expose the predatory tech industry practices large software vendors have implemented over time, according to Origina CEO and Founder Tomás O’Leary.

Inordinately demanding software license audits, policy changes that result in exorbitant price increases, and sudden, drastic shifts in licensing and delivery models are just three examples of potential nightmare situations businesses accept as a cost of doing business with megavendors, O’Leary notes in his presentation “Unmasking the Digital Cartel: Derisk Megavendors’ Predatory Practices” at the 2024 Gartner IT Symposium/Xpo in Orlando.

The incremental changes software OEMs have implemented have shifted the balance of power away from customer companies toward the suppliers at the top. Change will only come when more companies begin questioning long-held assumptions about acceptable behavior from software OEMs and demand better ways of doing business.

How Did Predatory Tech Industry Practices Happen?

How have companies come to allow software megavendors to hold so much technical and financial sway over their operations? O’Leary thinks it’s a textbook case of conditioning.

“We’ve had 30 years, maybe more, of being convinced that these organizations are the only organizations that really know what they’re talking about and that we have to learn from them and listen to them,” he says.

There is a tendency to accept what auditors say as gospel when they come back with massive findings derived from murky-at-best rules. It’s also the reason companies go along with megavendors like Broadcom despite highly unpopular moves like dropping VMware perpetual license support. Even if the issues are an annual source of lost sleep for multiple divisions in the customer company, even if you can almost set a clock to their frequency, there is a baked-in assumption that nothing can be done.

Over time, the granular change has created a working landscape where megavendors like IBM and VMware by Broadcom hold total control over their customer relationships, or at least appear to. All those unpopular moves add up over time, with each eroding the customer’s ability to control the technology they’ve paid for just a bit more.

Leveling the Playing Field

Software suppliers are huge companies, and any organization that tries to drastically change 30 years of baked-in disadvantage likely faces an uphill challenge.

“It’s not easy if you’re a single organization on your own,” O’Leary says. “No matter how big you are, these guys are so much more powerful than you.”

That, O’Leary says, is precisely why companies who want to undermine predatory practices in the tech industry need to team up and collaborate. Working together, they have a much better chance of altering the landscape.

In a B2B technology context, collaboration could mean anything from supporting industry watchdog groups to joining an organization like Free ICT Europe or Free ICT USA that promote fair and open markets, as well as works toward removing barriers to the independent trade, repair, and maintenance of hardware and software.

Finding effective ways to push back when OEMs make unpopular, uncompetitive changes will also be essential. Realistically, O’Leary thinks a combination of these approaches will likely be required to make real change, considering how customer-unfriendly the software world has become.

Change Starts with Asking Better Questions

Teamwork is the most effective route to change, but that doesn’t mean individual companies are totally powerless to alter how they interact with their technology suppliers. By understanding how much the landscape has shifted to benefit select megavendors and taking note of predatory tech industry practices they experience and hear about, IT stakeholders can start to examine their own operations and ask harder questions about how their companies utilize the technology suppliers they rely on.

But It’s not just about outlining what the megavendors have done. Building more resilience, self-sufficiency, and internal trust in the ability to get the job done are just as crucial.

“We need to trust ourselves more,” O’Leary says.

In terms of software maintenance and security, both of which have high potential to chew up overall IT spending, that means taking steps to understand how much control companies have unnecessarily handed over.

Think about these questions:

• When you receive an IBM end-of-support announcement and the OEM tells you upgrading to a new version or surrendering your existing licenses is the only way to keep receiving support for problems, are they telling the truth?
• What do incidents like the CrowdStrike outage tell us about the dangers of a dogmatic attitude toward performance and security patching, and how much risk are companies willing to shoulder when they give OEMs so much freedom to make change via their updates?
• Why do software vendors place artificial shelf lives on their products, and why do they position themselves as the only valid providers of maintenance when practices like independent software maintenance make it possible to use unsupported products indefinitely?

Despite their infinitely deep pockets and carefully crafted ecosystems, software megavendors aren’t the only ones capable of changing the status quo. As more companies come to realize just how difficult supplier business relationships have made it to maximize full use of the software they provide, O’Leary says he hopes customers will speak out in favor of a tech industry free of predatory practices – one where every business feels empowered to secure, maintain, and support its software independently of the OEM’s involvement.

Break free of predatory tech vendor practices. Give your IBM, VMware, and HCL software the care it deserves.