It wasn't much of a surprise to people following the
progress of the Oracle's acquisition of Sun Microsystems that a formal
objection to the $7.4 billion deal was handed down Nov. 9 from the European
Commission.
The EC, the antitrust arm of the 27-nation European Union, informed both Oracle
and Sun that the decision was because the deal includes the freely available
and popular MySQL Web database. The regulators see a major conflict of interest
in the world's largest commercial database company owning its largest open-source
competitor.
The EC's action doesn't slam the door on the proposed acquisition, but it does
serve to delay the process. Oracle and Sun announced the transaction way back
on April 20; the U.S. Department of Justice, the federal watchdog over
antitrust issues, sanctioned the deal four months later.
Oracle and Sun are expected to appeal the objection immediately. It is the EC's
policy to not make statements to the press on such matters.
Oracle issued a statement late Nov. 9. Here is the statement in
its entirety.
In part, the statement reads:
"The database market is
intensely competitive with at least eight strong players, including IBM, Microsoft, Sybase and three distinct open source vendors. Oracle and
MySQL are very different database products. There is no basis in European law
for objecting to a merger of two among eight firms selling differentiated
products. Mergers like this occur regularly and have not been prohibited by United States or European regulators in decades."
The EC holds a great deal of influence in this case.
Oracle does business in just about every EU nation and stands to lose a huge
amount of business if the EC does not bless the deal.
EC Competition Commissioner Neelie Kroes has said several times she needs to
see proof that under Oracle's ownership MySQL can continue to develop and be
innovative. Oracle, in her words, has yet to do that.
"It's not too much of a surprise that the EC took this action, saying that
the only objection to the merger is MySQL," Roger Burkhardt, CEO of Ingres, the world's second-largest enterprise open-source database
company, told eWEEK. "If they [the EC] had added something [to the
protest] about the Java world, for example, or something else, then it might
have been more newsworthy.
"I do think—and I haven't said this in a long time—that I agree with
Oracle in that the EU does not appear to know about the realm of competition in
the database market, and they don't appear to know how open-source software
works. Any company can build a business around it [MySQL]."
'Real Market Forces' Are Outside Oracle's World
Burkhardt agrees with former MySQL
CEO Marten Mickos in that the real market forces lie in the open-source world
outside the realm of Oracle's proprietary businesses.
"I do have some sympathy for [the EC's] position," Burkhardt said,
"because there is a lack of competition in the enterprise database market.
That Oracle has claimed that this is a competitive market is, in fact, untrue.
Look at the level of price increases that have been sustained in the markets—and
more broadly, in the infrastructure middleware and application markets—that
Oracle sells into.
"It [databases] is one of the few areas of the market that has raised
prices in the middle of what has been the worst economic slowdown in the last
50 to 70 years."
Burkhardt said Oracle could just "start a separate MySQL Foundation or
something like it, put some luminaries on the board, and spin it off—but what
difference would that make?" he asked rhetorically. "It's still, and
always will be, an open-source business."
Open-source activist and former MySQL business adviser Florian Mueller told
eWEEK that "Oracle wants it all, Sun stands to lose it all and the
European Commission apparently had no other choice but to issue this Statement
of Objections because Oracle just doesn't want to understand.
"Those who claim that MySQL's open-source nature all by itself ensures
competition ignore the fact that open source is just a distribution vehicle
while MySQL depends on a company using the related intellectual property rights
to generate revenues and fund further development.
"Why would Sun have paid $1 billion for something that can be forked? Why
doesn't Oracle just close the Sun deal quickly without MySQL and fork it—if
it's all that easy to do and it doesn't matter who owns the assets?"
Mueller said.
Oracle CEO and founder Larry Ellison said at the recent Oracle OpenWorld
conference in San
Francisco,
"MySQL in no way competes with our databases. It has its own market and
following. The main competitor is Microsoft [SQL Server], and that's OK by
us."
MySQL was bought by Sun in January 2008 for $1 billion. The acquisition of Sun
would immediately transform Oracle from an enterprise database and middleware company
into one of the world's top 10 IT systems providers. Meanwhile, Ellison claims
Sun is losing $100 million and thousands of jobs a month as Sun customers put
new purchases on hold until they find out the fate of the company.
Editor's note: This story was updated to include an excerpt
from—and a link to—the Oracle statement about the EC's objection to the Sun
acquisition.
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