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Could the EU Block the Oracle-Sun Deal?

10.22.2009
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This week the European Commission expressed its displeasure with Oracle's lack of cooperation in the antitrust probe surrounding the Sun acquisition.  According to the commission, Oracle has not produced evidence against, or a remedy for, the competition problems outlined by the commission.  The competition problems stem from the acquisition of Sun's MySQL database, the commission says. 

MySQL cofounder Michael "Monty" Widenius agrees with the commission's concerns about merging the fastest growing open-source database, MySQL, with Oracle's massive proprietary database.  Florian Mueller, a former MySQL shareholder, also supports the comission's stance.  Mueller says, "every day that passes without Oracle excluding MySQL from the deal is further evidence that Oracle just wants to get rid of its open source challenger and that the EU's investigation is needed to safeguard innovation and customer choice. This is highly critical because the entire knowledge-based economy is built on databases."

On the other side, MySQL ex-CEO Marten Mickos has come to the defense of Oracle, saying that an acquisition of Sun and MySQL would increase competition in the database market.  Mickos says in his letter, "if it becomes difficult or impossible for large companies to acquire open-source assets, then venture investments in open-source companies will slow down, harming the evolution of and innovation in open source, which would result in decreased competition."

The merger has already been approved by the US Justice Department but Oracle may not get the EU's approval for the Sun acquisition until January, which is the decision deadline.  In the meantime, Sun announced plans to lay off 3,000 employees this week and is losing $100 million a month according to Oracle CEO Larry Ellison.  The two sides continue to blame the other for delaying the merger and causing Sun's subsequent woes.

Before OpenWorld 2009, MySQL's products weren't expected to receive much investment or improvement from Oracle.  Ellison surprised some by declaring he would increase investment in MySQL.  MySQL accounts for for less than 5% of Sun's total revenue so Oracle must see some serious potential in MySQL, otherwise it wouldn't be reluctant to sell them to a third-party.  MySQL and Oracle together could give other database heavyweights like IBM and Microsoft a run for their money. 

The only question is, will the EU block the acquisition?  Their intention may have only been to delay the merger for a closer look, but will they follow through with their threats if Oracle stands firm on MySQL?

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Comments

Masoud Kalali replied on Thu, 2009/10/22 - 4:31pm

I think EU will not block the merger, the merger is in good fait for everyone using MySQL and Java or having plan to use them.

With the man power and investment ORACLE will put behindJava, Soalris and MySQL we will see some differences in few years.

The thing that make me wonder is the reaction from ORACLE if (a distant possibility)  EU block the deal.

 

 

Jilles Van Gurp replied on Fri, 2009/10/23 - 10:50am

It's hard to predict what they will do of course. However, Oracle is now being watched more carefully. Whether or not the acquisition goes through, that means that they risk being more exposed to EU scrutiny. Experiences of MS in the past have shown that they have patience and determination to make companies change course. Bad news for an aggressive Oracle buying competitors left and right. So in the end, deciding to kill off Mysql is something that is unlikely to happen since they'd expose themselves to years of court room exposure.

vlad varnica replied on Wed, 2009/10/28 - 5:48am

How EU can block a merge which has been already approved by USA. This EU commission behavior is today pathetic !!

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