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    Oracle Trial Focuses on DOJs Big Three Theory

    By
    John Pallatto
    -
    June 8, 2004
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      SAN FRANCISCO—Testimony in the Department of Justice antitrust trial against Oracle zeroed in on the governments key theory that PeopleSoft Inc. is one of only three companies that compete in the global market for high-end enterprise application software.

      Richard Bergquist, PeopleSoft Inc.s chief technology officer and the companys only fellow, testified that SAP AG and Oracle Corp. are the competitors PeopleSoft encounters most frequently in selling its human resources management and financial management software to enterprise customers.

      Bergquist also testified about PeopleSofts yearlong efforts to gradually develop additional financial management applications that would make it more competitive with SAP and Oracle.

      PeopleSoft started in the late 1980s as a producer of enterprise human resources management software. Bergquist said it took five to seven years and millions of dollars in investment to make the companys financial service applications “competitive on a global basis” with offerings from SAP and Oracle.

      The investment allowed PeopleSoft to grow steadily enough during the 1990s to close the large revenue gap that existed between PeopleSoft and SAP, bringing it from 7 to 1 in 1995 to 3.8 to 1 in 2003, Bergquist said. PeopleSoft shrank the revenue gap between it and Oracle from 15 to 1 to 4.2 to 1 in the same period, he said.

      The purpose of the testimony was to show what PeopleSoft had to do over the past 17 years to compete in the market defined by the Department of Justice (DOJ) as “high-function” software, typically purchased by the biggest and richest global enterprises.

      Oracles lead attorney, Daniel Wall, has challenged the validity of the DOJs market definition. In opening arguments Monday, Wall claimed that a number of other companies, including Microsoft Corp., Lawson Software Inc., Automatic Data Processing Inc. and American Management Systems Inc., should also be considered as competitors in the enterprise market.

      Under questioning by DOJ trial attorney Phillip Malone, Bergquist described all of these companies as niche players that PeopleSoft rarely encountered in head-to-head sales competition. None of these companies had products that were as complex, scalable or ran on all the platforms offered by PeopleSoft, SAP or Oracle, he said.

      Under cross examination, however, Wall presented PeopleSoft documents listing the number of times in the past two years when PeopleSoft competed for sales with J.D. Edwards & Co., SAP, Siebel Systems Inc., Lawson, Microsoft, ADP and others.

      PeopleSoft acquired J.D. Edwards in June 2003, days before Oracle announced a $7.7 billion tender offer to buy out the company.

      DOJ has gone to trial in U.S. District Court here seeking a permanent injunction to prevent Oracle from closing the PeopleSoft buyout.

      /zimages/5/28571.gifKeeping a close eye on the Oracle-DOJ trial will provide valuable insights into the acts of software giants, Lisa Vaas writes. Click here to read more.

      Gary Rebak, an attorney representing PeopleSoft, raised objections to the courts allowing several documents to be displayed on courtroom monitors viewed by the public, claiming that the documents contained confidential corporate information.

      Judge Vaughn R. Walker ordered the court clerks to turn off the monitors for any of the documents that brought objections from Rebak.

      Testimony from DOJ witnesses will continue Wednesday, with appearances by Nancy Thomas from IBM Global Services and executives from Target Corp. and Nieman Marcus Group, both PeopleSoft customers.

      /zimages/5/28571.gifCheck out eWEEK.coms Enterprise Applications Center at http://enterpriseapps.eweek.com for the latest news, reviews and analysis about productivity and business solutions.

      /zimages/5/77042.gif

      Be sure to add our eWEEK.com enterprise applications news feed to your RSS newsreader or My Yahoo page

      John Pallatto
      John Pallatto has been editor in chief of QuinStreet Inc.'s eWEEK.com since October 2012. He has more than 40 years of experience as a professional journalist working at a daily newspaper and computer technology trade journals. He was an eWEEK managing editor from 2009 to 2012. From 2003 to 2007 he covered Enterprise Application Software for eWEEK. From June 2007 to 2008 he was eWEEK’s West Coast news editor. Pallatto was a member of the staff that launched PC Week in March 1984. From 1992 to 1996 he was PC Week’s West Coast Bureau chief. From 1996 to 1998 he was a senior editor with Ziff-Davis Internet Computing Magazine. From 2000 to 2002 Pallatto was West Coast bureau chief with Internet World Magazine. His professional journalism career started at the Hartford Courant daily newspaper where he worked from 1974 to 1983.

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