Net maintenance provider sues Cisco over allegedly monopolistic SMARTnet

Update: Cisco defends its practices in statement

Network maintenance services provider Multiven yesterday filed an antitrust lawsuit against Cisco over what Multiven alleges are "illegal and exclusionary" provisions of Cisco's SMARTnet program.

(Cisco response below.)

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From the Multiven press release:

... Cisco harmed Multiven and consumers by bundling and tying bug fixes/patches and updates for its operating system software to its maintenance services (SMARTnet) and through a series of other illegal exclusionary and anticompetitive acts designed to maintain Cisco's monopoly in the network maintenance services market for Cisco networking equipment.

... instead of making these necessary software updates and bug fixes available to all customers that have purchased its operating software license, as does Microsoft, Apple and Hewlett-Packard, and many others, Cisco makes these software updates and bug fixes available only to those customers that have purchased Cisco's SMARTnet.

These acts and practices of defendant Cisco have had the following monopolistic, anticompetitive and injurious effects in the marketplace for network services:

Competition in the market for service and maintenance of Cisco networking equipment has been suppressed and virtually eliminated. ...

Customers have been deprived choice and forced to purchase Cisco SMARTnet maintenance services over that of substantially better quality and/or lower priced maintenance services from plaintiff Multiven, and other ISOs.

Multiven fired an earlier public salvo in this dispute in September when it published on its corporate blog a missive entitled: "Anti-Competition Concerns in US Government and Fortune 500 Request For Proposals (RFPs): Cisco SMARTnet." From that article (.pdf):

Several US government agencies and Fortune 500 corporations publish Request For Proposals - RFPs (also referred to as Request For Quotes - RFQs) for maintenance of Cisco Systems networking equipment and specifically request for " Cisco SMARTnet only" ("SMARTnet" is Cisco Systems' brand name for its network maintenance service) and request that companies that participate in their RFPs must ensure they purchase the service from "Authorized Cisco Resellers" or from "Cisco Directly" Additionally, they require the vendor to provide a letter from Cisco that the vendor is authorized to sell the products required in every bid.

Headquartered in Redwood City, Calif., Multiven was founded in 2005 by Peter Alfred-Adekeye, who worked for Cisco for five years prior to venturing out on his own.

I've contacted Cisco to see if the company will have any comment on the lawsuit.

(Update, 11:30: Cisco spokesman just called to promise a statement within 3-4 hours. I find it somewhat surprising that they apparently will have more to say than "no comment.") 

(Update, 2:40: Here's Cisco's reply from Terry Alberstein, senior director of corporate public relations:

"Cisco believes in open and fair competition in the network hardware and service industry.  We intend to vigorously defend the allegations in this case and are confident that we will prevail in the matter. 

"Cisco customers are in no way required to purchase services from Cisco.  There are thousands of partners who offer service programs for Cisco products, including bug fixes.  Additionally, customers who purchase SMARTnet from Cisco routinely rate Cisco's post sales support and access to our technical assistance centers (TACs) as among the best support offerings in the IT industry.

"Cisco's SMARTnet policies for servicing equipment are also consistent with industry practices for making bug fixes available.  We have supported millions of customers through these programs which have helped ensure the internet is secure and can continue to grow at a rapid pace.  Our bug fix processes have been recognized as among the most transparent bug list publication processes in the industry."

To be continued .... )

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