Oracle Seeks Microsofts Help in Fending Off DOJ

As it continues its attempt to acquire PeopleSoft, Oracle is appealing to Microsoft and other players to provide the Justice Department with information regarding their plans in the ERP market.

Oracle Corp. will indeed turn to Microsoft Corp. for help in fending off the U.S. Department of Justice as it attempts to acquire PeopleSoft Inc.—just as it will turn to others it has named as competitors in the enterprise resource planning applications market.

Oracle spokeswoman Jennifer Glass confirmed that Oracle will appeal to archrival Microsoft to provide the Justice Department with information regarding its plans to expand its small and midsize applications business to larger enterprises. But, Glass said, Oracle will seek similar information from others in the ERP sector.

"We intend generally to take discovery from major players in the industry," said Glass, in Redwood Shores, Calif.

The company said it will seek information from such ERP competitors as Lawson Software Inc., ADP TotalSource Group Inc., Baan, GEAC Computer Corp. Ltd., Hyperion Software Corp. and Kronos Inc.

The Justice Department said last week it will seek a federal injunction to block Oracles $9.4 billion hostile bid to acquire rival PeopleSoft, on the grounds that the deal would be anticompetitive to the software industry. R. Hewitt Pate, assistant attorney general leading the charge against Oracle, said the Justice Department determined only three players compete in top-level deals: Oracle, PeopleSoft and German software giant SAP AG.

The Justice Department did not consider midmarket players in its investigation, according to Pate.

"Any antitrust economist or lawyers who have been participating in this merger review are very familiar [with the midmarket players]," said Pate during a press conference in Washington last week. "Thats not in our judgment necessary to conclude this merger is anticompetitive."

Oracle, of Redwood Shores, Calif., has continually countered that there are others that compete for software deals within the worlds biggest companies—pointing to Microsoft as one of the likeliest and, potentially, deadliest competitors.

Microsoft, of Redmond, Wash., currently offers ERP software to small and midsized companies with revenues under $1 billion. While the company is actively investing in the sector and has said it will continue to expand its reach—Microsoft acquired two midtier ERP application providers in as many years—it has not said specifically it will target the enterprise market.

Those companies that Oracle points to as enterprise-level competitors are by and large small and midmarket players with annual software sales in the hundreds of thousands of dollars. In contrast, Oracle recorded $2.5 billion in software revenues in 2003, while behemoth SAP reported nearly $8 billion in software sales in the same year.

The twist with any request Oracle puts out to Microsoft is that Larry Ellison, Oracles CEO, has been doggedly outspoken against Microsoft during that companys own antitrust trial brought by the Justice Department.

Its unclear whether Microsoft will comply with Oracles request—particularly given the competitive nature of the industry and Ellisons personal attacks on the company.