As of Oct. 24, Oracle has been unable to convince a key European Commission antitrust regulator that it will develop and promote the freely available, open-source MySQL database as well as it would one of its homegrown — and much more expensive — parallel database products.
This conflict is becoming more problematic by the day for Oracle, the world’s second-largest software company, because the EC wields a great deal of power in this area. The Redwood City, Calif.-based corporation needs to make a big decision as soon as possible: Shall it continue to fight for MySQL, or not?
Oracle is in the process of acquiring the copyrights to the MySQL code base while it trudges through the legalities of acquiring Sun Microsystems in a $7.4 billion deal announced last April 20 and later cleared of antitrust liability by the U.S. Department of Justice. The EC won’t sanction the deal if it perceives an antitrust problem, and Oracle needs this blessing in order to do business in Europe.
MySQL’s trademark acronym (which stands for My Structured Query Language), the code, and most of the project’s key development leadership have called Sun home since January 2008, when the company bought MySQL for $1 billion.
However, Oracle is going to have to plead a stronger case to the EC and its hard-boiled Competition Commissioner, Neelie Kroes, so it can conclude the deal and stop the oozing red ink from Sun, which is losing about $100 million a month, according to Oracle CEO/founder Larry Ellison.
MySQL was developed in Europe by Sweden’s David Axmark and Finnish developer Michael Widenius and first released in 1995. It is in daily use inside an estimated 6 million IT systems around the world, including those of Google, Amazon.com, eBay, Yahoo and numerous other business systems. Most database administrators use the free version, but Sun also offers a paid edition that comes with support services.
MySQL is considered a major resource by many IT people — especially in Europe — who want to see it remain out of the clutches of a proprietary-software driven company.
Oracle, along with its acquisitions of PeopleSoft and Siebel, owns nearly half of the enterprise parallel database market. IBM, with its DB2, comes in at around 22 percent. Microsoft SQL Server has about 19 percent, with MySQL, Sybase and Teradata taking up most of the final 9 percent.
Oracle would control more than half the market following the Sun acquisition, most analysts agree.
Industry Groups Stepping Forward in Protest
In recent days, the conflict between Oracle and the EC’s Kroes is becoming more pronounced. Other software industry groups and community leaders, including the Open Rights Group, Knowledge Ecology International, and free and open source software icon Richard Stallman have written to Kroes, saying that they are concerned about Oracle’s possible squashing of competition in the database market.
They portray MySQL as becoming the unwelcome stepchild in a family of Oracle-branded enterprise databases.
Ellison doesn’t see it this way at all, saying at the recent Oracle OpenWorld conference in San Francisco that “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 okay by us.”
Oracle President Safra Catz made that claim in person to Kroes this past week in Brussels.
The Brussels-based EC, which serves as the antitrust watchdog wing of the 27-country European Union, is currently doing due diligence on two main areas of concern: Sun’s Java networking software franchise and the enterprise parallel database business. But a possible database monopoly is the key nut it wants to crack.
Kroes, who has been ranked by Forbes for several years as one of the world’s most powerful women in business, told Reuters Oct. 21 that Oracle has failed to produce hard evidence to placate concerns that its purchase of Sun would hurt competition.
“Commissioner Kroes expressed her disappointment that Oracle had failed to produce, despite repeated requests, either hard evidence that there were no competition problems or, alternatively, proposals for a remedy to the competition problems identified by the (European) Commission,” EC spokesperson Jonathan Todd told the news service.
Several analysts contacted by eWEEK had varying points of view about whether Oracle should divest itself of the MySQL franchise in order to complete the Sun acquisition.
“There are at least three other database offerings in the marketplace besides Oracle: IBM DB2, Microsoft SQL Server, and PostgreSQL – an open-source alternative,” Brian Babineau of Enterprise Strategy Group told eWEEK. “In my opinion, that still represents a fairly competitive market. So I do not see any reason why Oracle would have to sell off MySQL to get the Sun deal approved.
“If the EU is hung up on the ‘We need an open source alternative in the market,’ then PostgresSQL should suffice. If the EU is hung up on the ‘We need large companies in the market,’ IBM and Microsoft should suffice.”
Hard to Ascertain Oracles Intent for MySQL
Joe Martins, managing director of Data Mobility Group, had a different take.
“It is in the users’ best interest for Oracle to agree to divest MySQL,” Martins told eWEEK. “Frankly, I don’t care if it happens through a sale or donation, as long as it’s safely out of Oracle’s clutch. Larry Ellison’s refusal to entertain the idea of divesting it should, in my opinion, raise concerns about his intent.”
Martins said he simply has no idea “what Larry has in store for MySQL. And everything I have read thus far is speculation. It’s best to just divest MySQL, sign the deal, end the debate and move on.”
Martins said his objections to a combined Oracle and MySQL have nothing to do with product overlap or competition.
“I never really viewed the two as direct competitors. My objections are cultural. I don’t believe the two organizations are a good fit, and a mismatch rarely works out well in the end. Then again, I never thought Sun-Oracle was a good fit culturally, either,” Martins said.
David Vellante of Wikibon told eWEEK that “my take is that this is a high-stakes game of a ‘no- blink contest.’ I always felt Oracle would not kill MySQL, but it wouldn’t invest over-zealously, either. It looks like Oracle is either pretty concerned about MySQL as a potential competitor, or it wants to use MySQL as a blunt instrument against Microsoft … or both.”
Java is the real key to the Sun deal from Oracle’s standpoint, Vellante said.
“Bottom line for me is Oracle needs to own Java, and in the end I don’t see it risking not getting control of that platform,” Vellante said. “I think the EU knows that and is digging in its heals to squeeze Oracle. My bet is eventually, Oracle has to give something to the EU because Java is so critical to Oracle, and Sun is bleeding.”
Rob Stevenson of TheInfoPro told eWEEK that “I think donating MySQL would be hurtful to end users; many IT development teams use MySQL, and having Oracle behind it is reassuring as a new application transitions to production. Microsoft benefits the most if Oracle divests itself of MySQL.”
Larry Rosen, a longtime IT intellectual property attorney, told eWEEK: “I don’t think any of us on the outside can really understand what Oracle’s motivations are, and I’m not sure how relevant they are to any issues that the EU and our government would have with respect to antitrust. They have very specific standards for analyzing trusts and monopolies. They are quite clear legal standards; we’ll have to wait and see what decisions are made.”
Rosen then reminded eWEEK of a little open-source history.
“Here’s something interesting about all this,” Rosen said. “Back when Red Hat bought [Java-based database] JBoss [in April 2006 for $350 million], it was rumored that Oracle was in on the bidding. At the time, Ellison made a remark in the press to the effect: ‘So what the hell are they buying? It’s just free software, a GPL [GNU General Public License] program.’ Now they want MySQL, and things have changed.
“What exactly are they [Oracle] buying [in MySQL]? A lot more than free software; that’s not what it’s all about. It’s about a trademark, customer good will, millions of users who are potentially going to be migrating [to other Oracle products]. Now it seems he has learned his lesson.”