A well-designed System Z emulator that allows users to migrate their own mainframe applications to commodity hardware would obviously pose a serious threat to IBM's mainframe business, but IBM's software licensing terms have historically prevented such a threat from materializing.
In many ways, the project arguably benefits IBM by encouraging interest in the mainframe platform. [...] What brought about IBM's change in perspective was an unexpected effort by the TurboHercules company to commercialize the project in some unusual ways.
TurboHercules came up with a bizarre method to circumvent the licensing restrictions and monetize the emulator. IBM allows customers to transfer the operating system license to another machine in the event that their mainframe suffers an outage. Depending on how you choose to interpret that part of the license, it could make it legally permissible to use IBM's mainframe operating system with Hercules in some cases.
Exploiting that loophole in the license, TurboHercules promotes the Hercules emulator as a "disaster recovery" solution that allows mainframe users to continue running their mainframe software on regular PC hardware when their mainframe is inoperable or experiencing technical problems. This has apparently opened up a market for commercial Hercules support with a modest number of potential customers, such as government entities that are required to have redundant failover systems for emergencies, but can't afford to buy a whole additional mainframe.
So if they don't like herculeas' efforts they should've brought out their own, or come to some kind of arrangement with them.