Kroes in U-turn on Oracle-Sun deal

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In a complete U-turn, the European Commission has given its approval to Oracle’s acquisition of Sun Microsystems. Sources close to the negotiation of the controversial deal say Neelie Kroes, the EU’s competition commissioner, bowed to political pressure from the US to approve the move.

Today (21 January) the European Commission confirmed that it had cleared the merger between Oracle and Sun, saying that the deal would still allow adequate competition in the database market. 

The Commission originally halted the deal in November because it would include Oracle’s acquisition of its biggest competitor in the database market, the MySQL database (EURACTIV 16/11/09). Oracle had received US antitrust approval for the acquisition in August. 

“The Commission’s investigation showed that although MySQL and Oracle compete in certain parts of the database market, they are not close competitors in others, such as the high-end segment,” read a statement from the EU executive today. 

Additionally, the Commission’s investigation found that another open source database, PostgreSQL, would be a credible rival to MySQL and could exert the same competitive force as MySQL on the database market. 

Kroes bows to US pressure 

The commissioner has allegedly bowed to political pressure from the United States to reconsider her initial stance on Oracle. 

According to sources involved in the negotiations, the US underlined the job losses at Sun Microsystems as a result of the EU’s objections to the deal. 

“Sun is in trouble and we need to consider that,” Kroes reportedly said during the negotiations. 

Sun Microsystems blamed the Commission for a further 3,000 job cuts, 10% of its workforce, in October last year. 

Observers say they are disappointed at Kroes’ decision given her reputation as an iron fist in competition cases. 

Kroes has previously extracted billions of euro in fines from dominant players such as Microsoft and Intel, but in this instance she “has not lived up to her reputation”. 

She has also tentatively made it into the next Commission line-up as the commissioner for ‘Digital Agenda’, but shaky auditions for the role have cast doubt over her ability in the field (EURACTIV 20/10/10). 

Originally lawyers and other stakeholders were expecting a decision on Tuesday, but the Commission’s announcement was pushed back due to the hearings of the new commissioners. 

Before Christmas the legal community in Brussels involved in the negotiations expected Kroes to demand further concessions from Oracle because the giant had not respected the EU’s procedural rules (EURACTIV 14/10/09). 

Monty to fight to bitter end 

MySQL’s creator and founder, Monty Widenius, has been leading a lobby against the deal and has said he will go to the Court of First Instance to appeal today’s announcement. 

Further afield, Widenius has extended his campaign against Oracle to China and Russia, both of whom have not yet granted clearance to the deal. 

The Chinese Ministry of Commerce (MOFCOM) and the Russian Federal Antimonopoly Service (FAS) announced that they are reviewing the implications of the deal. 

“China and Russia can still say ‘no’ unless there’s a real solution in place. They are powerful, self-confident and open-source-friendly countries and they have every right and opportunity to do a better job on this than the EU,” Widenius said in a statement. 

The MySQL database is run on open source code. Open source code gives businesses a relatively inexpensive tool to run their professional systems and services. At present, a license to use the code is available either under a General Public License (GNU) or from its current owner Sun. 

In practice, the GNU license limits a developer to adhere to its public licensing terms, and a commercial license from Sun allows mobile phone services, for example, to negotiate the use and cost of the code. 

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