Judge Faces Perplexing Decision in Oracle-PeopleSoft Case

By John Pallatto  |  Posted 2004-07-23 Print this article Print

Opinion: Judge Vaughn Walker will need the wisdom of Solomon to reach a decision on whether to block Oracle's $7.7 billion buyout of PeopleSoft.

Pity poor Judge Vaughn Walker. He sat through four weeks of often tedious testimony as Oracle and the Department of Justice sliced and diced the enterprise applications software market for his consumption.

Its now up to him to decide whether Oracle Corp.s $7.7 billion hostile takeover bid for PeopleSoft Inc. should be permanently banned because it violates antitrust law.

He will have to wade through thousands of pages of testimony transcripts, depositions and expert witness reports to reach a decision. Its hard to fathom how the legal mind can sift through such a huge volume of information to reach a just decision that is supported by the law and the facts.

The futures of thousands of employees and customers of both companies hang in the balance. His decision could make countless millions of dollars in PeopleSoft application installations obsolescent at a stroke.

After the government and Oracle finished their closing arguments this week, it was impossible to tell whether one side or the other had the upper hand.

The decision likely will hinge on whether Walker accepts the governments vision that the enterprise application software market is dominated at the high end by only Oracle, PeopleSoft and SAP AG. Then, he has to consider whether customers would likely have to deal with reduced competition that would lead to curtailed market choices and higher prices.

Walker was perplexed by the governments definition of "high function" enterprise software, which he described as "unwieldy and awkward" because it includes 18 elements describing features, function and complexity.

He also questioned the governments decision to limit the relevant software market to the United States rather than include the global market. The software products include essentially the same features and functions no matter where they are sold around the world, he noted.

Next Page: Building the governments case.

John Pallatto John Pallatto is eWEEK.com's Managing Editor News/West Coast. He directs eWEEK's news coverage in Silicon Valley and throughout the West Coast region. He has more than 35 years of experience as a professional journalist, which began as a report with the Hartford Courant daily newspaper in Connecticut. He was also a member of the founding staff of PC Week in March 1984. Pallatto was PC Week's West Coast bureau chief, a senior editor at Ziff Davis' Internet Computing magazine and the West Coast bureau chief at Internet World magazine.

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