EU Probe 'costing Sun $100m a month' according to Ellison
Speaking late on Monday night at the Churchill Club, a prominent Silicon Valley forum, Oracle chief executive Larry Ellison said that Sun Microsystems was losing $100m a month while European regulators scrutinise Oracle's acquisition plans for the company, the Financial Times reports.
Opposed by Oracle's competitors including SAP of Germany and Microsoft, the deal had been backed by Sun shareholders in July and by the United States Justice Department in August, leaving EU consent as the last obstacle to its conclusion. Oracle however didn't notify European Union regulators of its deal until late July, more than two months after it had informed American officials. The EU has a tendency to take rather a dim view of such moves, believing that they are often tactical manoeuvres intended to pressure the EU regulator into giving the green light to a takeover already approved in the United States.
At the beginning of September the European Commission opened an in-depth investigation under EU Merger Regulation expressing concern that Oracle may try and kill MySQL, a move that it believes would have a detrimental impact on competition in the database market. Competition Commissioner Neelie Kroes said:
"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. In particular, the Commission has an obligation to ensure that customers would not face reduced choice or higher prices as a result of this takeover. Databases are a key element of company IT systems. In the current economic context, all companies are looking for cost-effective IT solutions, and systems based on open-source software are increasingly emerging as viable alternatives to proprietary solutions. The Commission has to ensure that such alternatives would continue to be available."
Oracle is not able to publicly discuss its plans in any detail whilst the merger is in progress, and it is entirely unclear what it intends to do with regards MySQL. It might simply continue to develop the database much as Sun has done. During a difficult quarter 4 Sun's SEC filing reveals that billings for MySQL rose 10 per cent to $100m, close to the total billings for Java during the same period. If it wanted to protect its core proprietary database business, Oracle might look to raise support costs for MySQL to a level that makes it unattractive to commercial licensees, but this is just as likely to drive potential customers away from MySQL to alternative open source databases such as PostgreSQL as it is to drive them to Oracle's closed source platform. A third option would be to halt development of MySQL altogether but again it is hard to see what this would achieve. A number of forks of MySQL already exist including one created and managed by Michael Widenius. Widenius is one of the original co-founders of MySQL who left Sun earlier this year citing frustrations with Sun's engineering practices. He has also spearheaded the creation of an organization called the "Open Database Alliance" which promises to provide a vendor-neutral environment for coordinating a MySQL fork.
The commission has until the 19th January 2010 to complete its investigation. Upon completion it could offer a range of remedies from blocking the deal altogether, to approving it without conditions. This would be the same outcome as that in 2004 when the commission approved Oracle's acquisition of PeopleSoft without conditions after subjecting the deal to the same kind of in-depth inquiry now under way over its purchase of Sun. In 2005 the commission also approved Oracle's acquisition of Siebel Systems, again without conditions. If the commission does seek to impose conditions it might simply demand that Oracle provide guarantees for the future development of MySQL or it might demand the spinning off of the open source database altogether.
Oracle / MySQL
That would be dumb. MySQL competes with the 'regular' Oracle DB.
> drive ... customers away from MySQL
Yes, but killing MySQL would still make sense. The market share of Oracle DB is (let's say) 50%, so 50% of the customer will probably use Oracle DB. The price of MySQL is lower than 50% of the Oracle DB, so Oracle would still profit. It's not the first time a company buys another one just to kill it.
> A number of forks of MySQL already exist
There are legal challenges. Some say that if Oracle owns the intellectual property rights of MySQL, then another company must obtain a commercial license from Oracle to offer a commercial fork of MySQL. I hope that's incorrect, but it's possible.
Re: Oracle / MySQL
Carlos Adolfo Ortiz Quiros
Re: Oracle / MySQL
Well, this is for MySQL stuff, but what about to the other side of the coin, the Java Stuff? Any ideas, any considerations. Will Oracle continue its line or will it use the Sun line?