Oracle Withdraws Sun Buyout Petition to Russian Antitrust Regulators

The European Commission's roadblock slowing the Oracle acquisition of Sun Microsystems has led to another international problem for the world's second-largest software company.

Oracle on Oct. 30 withdrew its petition to obtain antitrust clearance to do business in Russia after the addition of Sun, following the planned completion of the $7.4 billion deal announced last April.

The Federal Antimonopoly Service of Russia requires that once it is notified of a merger or acquisition that may infringe upon antitrust laws, the companies involved have a maximum of 90 working days to complete the deal. Oracle does not believe the acquisition will be sanctioned by EC regulators within the 90-day window.

Here is an English translation of the Russian government document describing the Oracle withdrawal.

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Oracle, which, like any U.S. company, is legally limited in what it can say during a pending acquisition, did not return an eWEEK e-mail request for comment on Oct. 30.

The EC, which is the antitrust arm of the European Union, has been withholding blessing of the deal until it is satisfied that a key component in the Sun product line, the popular open-source MySQL database, will be allowed to innovate and compete fairly in the IT marketplace. The Wall Street Journal reported Oct. 30 based on sources of its own that the "Russian authorities want to see how Europe is going to deal with the issue first."

Oracle was informed that it either had to withdraw its notification or face a blocking decision from the Russians. So it chose to withdraw. The company can always resubmit its petition to Russia at a later date. It remains to be seen how the action will affect the entire acquisition.

Oracle has applied for antitrust clearance in a number of international jurisdictions, including China, Japan and India. The U.S. Department of Justice was the first to clear the deal back on Aug. 20.

MySQL, which claims more than 6 million working installations, is heavily relied upon in the data centers of Web 2.0 companies such as Google, Yahoo and Amazon.com and also has a loyal following in the small and midsize business markets. It was founded by Swedish and Finnish developers and is one of the biggest European IT success stories of the last 20 years.

Oracle has been questioned hard and often about its plans for MySQL, which Sun bought for $1 billion in January 2008. A number of industry experts and at least two database development communities are concerned that Oracle, which makes most of its profits selling and maintaining expensive parallel database licenses, will give short shrift to the freely available MySQL and ultimately squelch its loyal international development community.

Oracle has stated several times that it sees MySQL as a complementary offering inside its product line, that MySQL does not compete directly with Oracle's own databases, and that Oracle will continue to invest in MySQL's R&D.

Former EC business adviser and MySQL investor and adviser Florian Mueller told eWEEK Oct. 26 that "Oracle is a high-priced cash cow in the parallel database business. Why then should it be the one entity that controls development, determines revenues and controls an R&D budget of a competing product that it sells against directly in the database market?

"It is legally possible but not viable [for Oracle] to be an innovative competitive force [while owning MySQL]."

Oracle CEO and founder Larry Ellison doesn't see it this way, saying 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."

Most industry analysts contacted by eWEEK say they believe the Sun acquisition ultimately will earn the European Commission's blessing and Oracle will be allowed to do business in the 27-nation European Union. But the deal also is proving to be a nagging headache for both Oracle and EC regulators, who are not happy about a European-created IT product, MySQL, coming under the control of a proprietary database company.

Ellison said in a recent Silicon Valley public appearance that Sun is losing about $100 million per month and that Oracle needs to close the deal as rapidly as possible to stop the flow of financial red ink.