Oracle: EC Has 'Profound Misunderstanding' of Database Market

Oracle Corp. (ORCL) schooled the European Commission Monday on some basic knowledge about open-source technology, lashing out in a statement that the regulatory agency that’s currently holding up Oracle’s acquisition of Sun (JAVA) has revealed its “profound misunderstanding of both database competition and open source dynamics.”

Separately, the U.S. Department of Justice released its own statement, essentially backing Oracle and explaining its reasons for giving the go-ahead for the acquisition and why it felt the deal was not anti-competitive.

The European Commission has expressed concerns over MySQL, delaying the acquisition from moving forward, filing a Statement of Objections today. In a statement responding to the Commission’s filing, Oracle wrote:

Oracle’s acquisition of Sun is essential for competition in the high end server market, for revitalizing Sparc and Solaris and for strengthening the Java development platform. The transaction does not threaten to reduce competition in the slightest, including in the database market. The Commission’s Statement of Objections reveals 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.

The company argued that “the database market is intensely competitive,” with eight strong players and specifically names IBM, Microsoft (MSFT) and Sybase (SY) as open source vendors. As for MySQL competing with Oracle products, the company said they are very different and that there is “no basis in European law for objecting to a merger of two among eight firms selling differentiated products.” In its own statement, the U.S. Department of Justice seemed to agree. It wrote:

The Division concluded, based on the specific facts at issue in the transaction, that consumer harm is unlikely because customers would continue to have choices from a variety of well established and widely accepted database products. The Department also concluded that there is a large community of developers and users of Sun’s open source database with significant expertise in maintaining and improving the software, and who could support a derivative version of it

Sun, which was already a financially-troubled company when Oracle made its acquisition bid, recently laid off 3,000 employees as part of a restructuring plan that stems from delays in regulatory approval. Oracle CEO Larry Ellison recently said that delays are costing about $100 million per month.

Oracle noted that Sun’s customers “universally support this merger and do not benefit from the continued uncertainty and delay.” The company said evidence against the Commission’s position is overwhelming, and that it lacks any credible theory or evidence of competitive harm.

Comments

[dw57:]

move along nothing to see here.
sounds like Oracle is going to learn the same lesson MS did.

Nov 10 03:49 PM

[BeachRider:]

Sounds like the EC doesn't believe in the OSI & OSD. MySQL isn't just an 'Open System' (following open standards), but an 'Open Source System' (publishing how they do it). The OSS owner is obliged to make the source available to anyone, given some nominal media-copying fee. Oracle is simply the company that can sue mis-users of their Open Source System (is this what concerns the EC?). Their dominance over the support of MySQL is not implied by their ownership of the product. They certainly could publish future releases that take MySQL into new-territory, but the user-base need not follow them, unless they want to.

If the EC has limited belief in OSI/OSD, then they probably misunderstand what licensed-usage is for 'Open Source Systems'. That is a BAD thing for such a powerful magistrate.

Nov 10 04:43 PM

[achambers:]

It’s a great mystery to me why anyone would defend this merger. Oracle exists to make a profit, MySql provides a free alternative to their core database product and provides little revenue. It doesn’t fit well into Oracle’s product line but they certainly don’t want to split it off to any competitors, such as Microsoft. Unfortunately, that would be the best thing for MySql, it would be well supported by any competitor who purchased it and continue on its current course. Oracle makes no profit from throwing a lot of money into MySql and their shareholders won’t stand by while they waste money on this product, it’s doomed to be gradually phased out. There are certainly some other open source alternatives but a business, investing in a database product, needs some stability in the support of the product. They are willing to go with MySql because there is a large community behind it and Sun Microsystems backing it. The open source alternatives are slower and I personally would not be confident in their support, as a small business owner, I would be driven to look at paid alternatives. Oracle has the potential to eliminate the best database option for small businesses and the US government seems to be supporting it.

Nov 10 08:54 PM

[bearfund:]

Exactly how is Sun "financially troubled"? They have $2.4b in cash and even at a burn rate greatly increased by the acquisition that is enough to operate for many years. Rumours of its demise are greatly exaggerated.

Nov 11 04:01 AM

[edexter:]

I am under the impression that anyone including me can sell mysql products. You can see many free data bases on python.org for example. I never realy understood the judgement against microsoft because of internet explorer since firefox and others are freely available and it makes you wonder that Now that you can run linux (and unix, minux exc) on windows machines is that going to be anti-trust as well.

Nov 11 06:39 AM

[BeachRider:]

I don't think that you understand 'Open Source Systems'. Their value lies in marketing of for-profit product/services with them. ORCL's ownership of MySQL doesn't convey exclusivity on that activity (note RedHat/SUSE with Linux).

FYI MySQL doesn't generate 'Little revenue' on licenses, it generates 'NO REVENUE' on licenses. NO REVENUE times any number of users equals 'BAGEL' CURRENCY.

There could be concerns about ORCL 'poisoning' future releases, but users can ignore those releases. Extended behavior like this could cause some opportunistic 'user' to issue source modifications and become the de-facto source of future releases.

If the EC holds your position, then they are sadly over-endowed with Magistration on this issue.


On Nov 10 08:54 PM achambers wrote:

> It’s a great mystery to me why anyone would defend this merger.
> Oracle exists to make a profit, MySql provides a free alternative
> to their core database product and provides little revenue. It doesn’t
> fit well into Oracle’s product line but they certainly don’t want
> to split it off to any competitors, such as Microsoft. Unfortunately,
> that would be the best thing for MySql, it would be well supported
> by any competitor who purchased it and continue on its current course.
> Oracle makes no profit from throwing a lot of money into MySql and
> their shareholders won’t stand by while they waste money on this
> product, it’s doomed to be gradually phased out. There are certainly
> some other open source alternatives but a business, investing in
> a database product, needs some stability in the support of the product.
> They are willing to go with MySql because there is a large community
> behind it and Sun Microsystems backing it. The open source alternatives
> are slower and I personally would not be confident in their support,
> as a small business owner, I would be driven to look at paid alternatives.
> Oracle has the potential to eliminate the best database option for
> small businesses and the US government seems to be supporting it.

Nov 11 11:30 AM

[Moon Kil Woong:]

Ummm... openly criticizing the regulators that are opposed to a merger is a bad deal if you actually want one to go through. Oracle is best off keeping its mouth shut if it wants a deal. Personally, if the deal falls through it probably would be best for Oracle. Sun is a dead weight.

Nov 11 12:48 PM

[Robert0713:]

Fact: MySql is *not* Open Source, it is dual license, always was from day one. The original MySql developers used the commercial license funds to pay for the Open Source code as well. Oracle bought the InnoDB company, which provides an engine for the MySql wrapper which closely imitates Oracle syntax. There is an arm's length relationship between Oracle and MySql pre-merger; with merger, there is nothing to prevent Oracle from suspending both using commercial license fees to support the Open Source MySql and halting further development and support for InnoDB. Doing either would force existing commercial users of MySql into Oracle database. That's what the EU wants to prevent.

Nov 11 06:51 PM

[Lightway:]

Very well said. There is alot of speculation that Oracle bough MySQL to in fact kill it, even though they typically compete in different spaces.

One more note with regards to MySQL code. Though it is "open source," there have been very very few code commits from the open source community over the past few years. Most of the code enhancements have been done by dedicated (paid) MySQL developers.


On Nov 11 06:51 PM Robert0713 wrote:

> Fact: MySql is *not* Open Source, it is dual license, always was
> from day one. The original MySql developers used the commercial
> license funds to pay for the Open Source code as well. Oracle bought
> the InnoDB company, which provides an engine for the MySql wrapper
> which closely imitates Oracle syntax. There is an arm's length relationship
> between Oracle and MySql pre-merger; with merger, there is nothing
> to prevent Oracle from suspending both using commercial license fees
> to support the Open Source MySql and halting further development
> and support for InnoDB. Doing either would force existing commercial
> users of MySql into Oracle database. That's what the EU wants to
> prevent.

Nov 11 08:03 PM

[Thomas J. G...:]

The EC is destroying Sun by this action. Oracle would probably lay a lot of Sun people off but at least the healthy parts of the company would continue and everyone who works for Sun would know where they stand. But delaying the merger is killing Sun as a company. They are just a bunch of gov't Bureaucrats so they don't care, but they are ruining a lot of people's lives and making the world worse off by destroying all of Sun's intellectual property and the products they have that are successful in the market.
I'm a free market person but I think it's disingenuous to say the mysql doesn't compete with oracle. Facebook uses mysql, certainly got their start with mysql. That's big, enterprise database work, which is Oracle db's work. I'm not sure where open source fits into free markets but it's pretty obvious to me that Oracle wasn't going to spend a lot of money developing free mysql.

Nov 11 11:04 PM