EU finds Oracle-Sun deal anti-competitive

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Oracle’s case for buying Sun Microsystems has failed to convince the European Commission, which issued a statement of objections to the deal on Sunday (15 November).

The European Commission statement said that Oracle’s purchase of Sun Microsystems would harm competition in the profitable database market, marking a departure in competition policy from the Securities and Exchange Commission in the US, which cleared the deal. 

The EU statement, which was reportedly issued by the executive’s competition watchdog, concerns Oracle’s acquisition of Sun’s open source database, MySQL, which reaps about $300 million in revenue and could add to the buyer’s leading Java software. 

The Commission has not confirmed whether it sent a letter to Oracle adding that, as a matter of course, it never comments on such statements. 

However, statements from Oracle and Sun appear to confirm the EU’s objection to the deal. Oracle has said the EU’s position represents “a profound misunderstanding of both database competition and open source dynamics”. 

“It is well understood by those knowledgeable about open source software that because MySQL is open source, it cannot be controlled by anyone. That is the whole point of open source,” Oracle said. 

The EU’s probe does not spell the endgame for the deal, Sun has insisted, describing the statement as a “preparatory document”. 

Antitrust lawyers working on the deal had also previously given assurances that the Commission’s probe was not necessarily bad news for Oracle. 

The EU executive is following a different procedure to the Securities and Exchange Commission and could still come to the same conclusions, Christopher Thomas, an antitrust lawyer from the Lovells lawfirm said, commenting on the EU’s initial probe in September (EURACTIV 04/11/09). 

The US Department of Justice had approved the Oracle deal in August, declaring itself satisfied that there were enough, albeit smaller, competitors on the market and a large community of open source developers. 

Kroes has set January as the deadline for its final decision, putting the world’s third-largest software maker, Oracle, months behind its original plan for closing the deal. 

Oracle, IBM and Microsoft are the main players in the proprietary database market, which is worth $19 billion a year. 

In contrast to MySQL, which is based on freely distributed code and used to run many Web sites, Oracle’s database software runs corporate applications.

Michael Widenius, founder and original developer of MySQL, wrote on his blog that the European Commission was “absolutely right to be concerned” and called on Oracle “to be constructive and commit to sell MySQL to a suitable third party”.

“Those who claim that MySQL’s open source nature all by itself ensures competition ignore the fact that open source is just a distribution vehicle while MySQL depends on a company using the related intellectual property rights to generate revenues and fund further development,” Widenius said. “Why would Sun have paid $1 billion for something that can be forked? Why doesn’t Oracle just close the Sun deal quickly without MySQL and fork it if it’s all that easy to do and it doesn’t matter who owns the assets?”

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