Oracle Trial Opens with Wrangle over Market Definition

 
 
By John Pallatto  |  Posted 2004-06-07 Email Print this article Print
 
 
 
 
 
 
 

Opening arguments from Oracle and the Department of Justice centered on just what "high function" software really is, and which companies are part of that market.

SAN FRANCISCO—Whether the market for enterprise resource management software is as narrow and limited as the U.S. Department of Justice claims was the focus of opening arguments Monday in the governments antitrust lawsuit against Oracle.

Department of Justice antitrust specialist F. Claude Scott argued that Oracle Corp.s attempted $7.7 billion takeover of PeopleSoft Inc. is inherently anticompetitive because it would eliminate one of only three top players in the market for "high function" software: SAP AG, Oracle and PeopleSoft Inc.

Scott defined "high function" software as financial management and human resources management software that is so complex and requires so much configuration, customization and maintenance that only the biggest and richest companies can afford to buy it.

The DOJ is asking U.S. 9th District Court Judge Vaughn R. Walker to impose a permanent injunction to prevent Oracle from buying out PeopleSoft.

Oracles lead attorney, Daniel Wall, dismissed the DOJs "high function software" definition as so vague and arbitrary that the government might as well call the it "Yahweh—the market whose name cant be spoken."

An industry group to which Oracle belongs says the DOJs definition lacks a "basic understanding" of the market. Click here to read more.
As the DOJs Scott began his opening argument, Judge Walker closely questioned him about whether this software is readily available to customers in Europe and Asia as well as in the United States. Scott agreed that it is. But he said that with the softwares availability concentrated in just three major suppliers, continued competition between Oracle and PeopleSoft is essential to ensure that customers have enough choices to moderate prices.

Scott argued that other, smaller enterprise software companies, such as J.D. Edwards, now owned by PeopleSoft, had tried to build up their software to match the "high function" capabilities of PeopleSoft, SAP and Oracle, but gave up because it would cost too much and take too much time to compete at the same level.

PeopleSoft ended up buying J.D. Edwards days before Oracle presented its bid to buy out PeopleSoft.

Next Page: Oracle attorney calls the DOJs case "anecdotal- and vignette-driven."



 
 
 
 
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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