Antitrust Is in the Eyes of the Beholder

By Lisa Vaas  |  Posted 2004-03-01 Print this article Print

Defining whether Oracle/PeopleSoft would be anticompetitive depends on how you define the market, writes Database Center Site Editor Lisa Vaas.

The nub of the Oracle-PeopleSoft fight is whether the market for back-office applications will shrink. Thats a vitally important question, and it bears a closer look. Ironically, the Justice Department, in a 17-page civil antitrust lawsuit filed last week in U.S. District Court in San Francisco, used Oracle Co-President Chuck Phillips own words against the company. Citing a Phillips report that hailed from his days as an industry analyst for Morgan Stanley in 2002, the DoJ suit reads, "He issued a report that stated, The back-office applications market for global companies is dominated by an oligopoly comprised of SAP, PeopleSoft and Oracle. The market is down to three viable suppliers who will help re-automate the back-office business processes for global enterprises for years to come."
The lawsuit went on to assert that the elimination of one of those three vendors would harm current customers, likely resulting in higher prices and a lessening of competition between Oracle and PeopleSoft, which has up until now led to a "high level of innovation and upgrades to each companys products," the lawsuit said. "Oracle will no longer have the incentive to innovate in order to differentiate itself from PeopleSoft," it said.
As ironic as it is that Phillips himself saw the market as an oligopoly, it bears noting that there are industry experts who disagree with that assessment. For example, Mike Dominy, analyst of Business Applications & Commerce for The Yankee Group, in Boston, is of the opinion that Oracle would hardly hang onto all divisions following a successful takeover and would instead likely spin off J.D. Edwards. Next page: Why a combined Oracle/PeopleSoft would and should shed J.D. Edwards.

Lisa Vaas is News Editor/Operations for and also serves as editor of the Database topic center. Since 1995, she has also been a Webcast news show anchorperson and a reporter covering the IT industry. She has focused on customer relationship management technology, IT salaries and careers, effects of the H1-B visa on the technology workforce, wireless technology, security, and, most recently, databases and the technologies that touch upon them. Her articles have appeared in eWEEK's print edition, on, and in the startup IT magazine PC Connection. Prior to becoming a journalist, Vaas experienced an array of eye-opening careers, including driving a cab in Boston, photographing cranky babies in shopping malls, selling cameras, typography and computer training. She stopped a hair short of finishing an M.A. in English at the University of Massachusetts in Boston. She earned a B.S. in Communications from Emerson College. She runs two open-mic reading series in Boston and currently keeps bees in her home in Mashpee, Mass.

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