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The EC Is Looking Deep Into the Sun-Oracle Deal

09.03.2009
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The European Commission opened an in-depth investigation into Oracle's planned $7.4 billion takeover of Sun Microsystems Thursday, citing "serious concerns" about the deal's effect on competition in the market for databases.

Europe's top competition authority called for a closer look at the deal after conducting a routine month-long examination. The Commission "has to examine very carefully the effects on competition in Europe when the world's leading proprietary database company proposes to take over the world's leading open source database company," said Competition Commissioner Neelie Kroes in a statement. Sun competes against Oracle, among others, with its open source database, MySQL.

The Commission's job in the extended investigation "is to ensure that customers would not face reduced choice or higher prices as a result of this takeover," she said.

The database market is highly concentrated with the three main competitors of proprietary databases -- Oracle, IBM and Microsoft -- controlling roughly 85 percent of the market in terms of revenue, the Commission said in a statement. Oracle is the market leader in proprietary databases, while Sun's MySQL database product is the leading open source database. The Oracle databases and Sun's MySQL "compete directly in many sectors of the database market and MySQL is widely expected to represent a greater competitive constraint as it becomes increasingly functional," the Commission said.

The Commission said that during its initial probe it found that the open source nature of Sun's MySQL might not eliminate fully the potential for anti-competitive effects.

"In its in-depth investigation, the Commission will therefore address a number of issues, including Oracle's incentive to further develop MySQL as an open source database," the Commission said.

Earlier this week Sun reported a 31 percent drop in sales during the quarter running from April to June, compared with sales during the same period in 2008. Operating loss for the quarter was $218m, compared with an operating profit of $63m a year earlier.

Published at DZone with permission of its author, Justin Sargent.

(Note: Opinions expressed in this article and its replies are the opinions of their respective authors and not those of DZone, Inc.)

Comments

Coffee Jolts replied on Thu, 2009/09/03 - 9:00am

What exactly does the EC plan to do about two US companies merging?

Artur Biesiadowski replied on Thu, 2009/09/03 - 9:57am

Not sure, but in worst case they could suggest ban on importing Oracle products? Kick Oracle subsidiaries out of Europe? Impose heavy fines on European branches of company?

Somehow Microsoft is scared of EC enough to gut Windows in some countries.

Mike P(Okidoky) replied on Thu, 2009/09/03 - 10:18am

MySql is open source, and can be forked by anyone. From what I gathered, original Mysql developers already did.

Sun (Oracle) is also very cozy with PostGresql, the last hope for a good database (for a while), in the event Mysql gets sabotaged.

I think the EC can frown all it wants, but can't actually do anything. With Windows it was different. It was one company cheating on anti competition laws. The EC has better integrity and actually did something about it.

 

 

Anonymous Coward replied on Thu, 2009/09/03 - 11:46am

They can actually do much the same as the US authorities can do. I doubt they'll block the deal though. If anything they'll force the merged company to sell off MySQL and/or some of its other businesses.

Tom Wheeler replied on Thu, 2009/09/03 - 3:59pm

Furthermore, they do have divisions incorporated in other countries.  For example, Oracle Deutschland GmbH in Germany or Sun Microsystems Czech, s.r.o. in the Czech Republic.  I'd expect that the EU has power to regulate them in the same way that one US state can regulate a business which does business in that state, regardless of whether the business is chartered in another state.

Tom Wheeler replied on Fri, 2009/09/04 - 1:46pm

BTW you have a spelling error in the headline: "Orcale" should be "Oracle"

Vikash Ranjan replied on Fri, 2009/09/04 - 3:20pm

It could be driven by Microsoft. I think EU implications can have serious consequences in overall organization business for Oracle.

BTW, ORACLE has a few anagrams ....Yahoo uses in-memory DB for their Ad-system--since it's NOT Oracle, they call it Elcaro ... the reverse of Oracle :)

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