Oracle Rapped for Misleading Advertising

By Darryl K. Taft  |  Posted 2012-04-16

Oracle has come down on the wrong side of an advertising watchdog organization over misleading advertising claims, prompted by complaints from rival IBM.

The National Advertising Division of the Council of Better Business Bureaus has recommended that Oracle discontinue certain pricing and comparative performance claims for the Oracle SPARC SuperCluster T4-4 computer system.

The NAD, the advertising industry€™s self-regulatory forum, opened an inquiry into advertising claims that appeared on the front page and in a full interior page of The Wall Street Journal, in The Economist and on the Website, following a challenge from IBM. And in an April 11 decision, the NAD recommended that Oracle provide additional information to clarify its position vis-à-vis IBM.

IBM bristled over both expressed and implied claims made by Oracle in its advertising. The expressed claims included that Oracle€™s SPARC SuperCluster T4-4 computer system €œruns Oracle & Java twice as fast as IBM€™s fastest computer,€ which the advertising identifies as the IBM €œP795€ server. And that Oracle€™s SPARC SuperCluster T4-4 system costs $1.2 million, whereas IBM€™s €œP795€ server costs $4.5 million.

The implied claims in the ad included that Oracle€™s SPARC SuperCluster T4-4 computer system runs all Oracle and Java software products twice as fast as all of IBM€™s Power 795 server designs (including all TurboCore mode designs). And that Oracle€™s SPARC SuperCluster T4-4 computer system runs all Oracle and Java software products twice as fast as any IBM computer.

The challenged claims €œconveyed a very powerful message regarding the comparative price and performance of the SSC T4-4 and the IBM Power 795 line: for $3.3 million less, [one] could purchase an SSC T4-4 that runs Oracle and Java twice as fast as any IBM system in the Power 795 line,€ the NAD noted in its decision.

While the case appeared €œat first blush €¦ to focus on complex technical issues laden with the language of €˜computerese,€™€ upon closer review, the NAD determined that it presented issues similar to those the NAD examines on a regular basis€”express and implied comparative price and performance claims, line claims and disclosures.

The NAD determined that both the advertiser and challenger produce high-quality computer systems for businesses; at issue was whether the advertiser€™s superior comparative performance and pricing claims conveyed a truthful, accurate and non-misleading message regarding the performance and price of Oracle€™s SPARC SuperCluster T4-4 computer systems compared with the featured IBM computer system. 

In the print publications, the advertising copy stated: €œSPARC SuperCluster Runs Oracle & Java Twice as Fast as IBM€™s Fastest Computer.€

Images of the Oracle SSC T4-4 and the IBM Power 795 computer systems were accompanied by the following pricing information and messaging:

€œSSC T4-4 $1.2M€

€œIBM P795 $4.5M€

€œBuilding planets is expensive€

€œ8x Better Price/Performance.€

The bottom of the page provided a link to the Oracle Website: €œ€ No additional disclosure was provided.

Moreover, an image of the challenged print advertisement also appeared on the Oracle Website under the heading: €œSPARC SuperCluster versus IBM,€ accompanied by the following bullet points:

  • Twice as Fast€”SPARC SuperCluster T4-4 runs Java Applications and Oracle Database twice as fast as IBM Power 795.
  • $3.3 Million Lower Purchase Price€”A sample deployment of a similar IBM Power 795 and SPARC SuperCluster T4-4 can be $3.3 million less.
  • 8X Better Price/Performance€”Based on the SuperCluster T4-4 performance and price advantage, SuperCluster results in 8 times better price to performance than the IBM Power 795.

The Oracle site also offered this disclosure:

€œSources for Comparison of Systems: Systems cost based on server, software and comparable storage list prices (without discounts), as well as third party research. Performance comparison based on Oracle internal testing together with publicly available information about IBM Power 795 TurboCore system with highest processor speed commercially available (4.25 GHz) as of Sept 28, 2011.€

However, following its review of the evidence in the record, the NAD determined that at least one reasonable interpretation of the challenged €œtwice as fast€ claim is that the SSC T4-4 runs all Oracle and Java applications twice as fast as any IBM computer configuration in the Power 795 line€”a claim that was not supported by the advertiser€™s evidence and could not be cured by the disclosure at the advertiser€™s Website. The NAD recommended that the advertiser permanently discontinue the use of claim €œSPARC SuperCluster T4-4 runs Oracle and Java twice as fast as IBM€™s fastest computer.€

Also, to avoid conveying the misleading message that the IBM Power 795 system costs $4.5 million, the NAD recommended that Oracle expressly inform consumers, in the main body of the advertisement, that a separate storage unit was included in the price. 

In addition, to avoid consumer confusion regarding future price comparisons for the SSC T4-4 and the IBM Power 795, the NAD recommended that the advertiser provide consumers with the following information: 1) the specific model and configuration of the IBM Power 795; 2) the specific storage unit included in the price comparison; and 3) the assumed prices for both units. 

Meanwhile, Oracle, in its advertiser€™s statement, said the company disagreed with certain parts of the NAD€™s findings. €œNevertheless, Oracle wishes to inform the NAD that the advertisement at issue in this proceeding has been discontinued and Oracle does not intend to disseminate it in that form in the future. Oracle supports the NAD and the self-regulatory process, and will take the NAD€™s concerns into account should it disseminate the advertisement in the future,€ the company said in a statement to the NAD.

"IBM is pleased the National Advertising Division recommended that Oracle permanently discontinue the use of what it described as an 'overly broad claim' that the 'SPARC SuperCluster T4-4 runs Oracle & Java Twice as Fast as IBM's Fastest Computer,€™€ IBM said in a statement.

Oracle said it had no comment for this eWEEK report.

Ironically, Oracle in its legal wrangling with HP, in December amended a lawsuit against HP to include a claim of false advertisement for not telling Oracle or its customers that HP was secretly paying Intel to continue producing Itanium processors.



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