Oracle vs. SAP: No Mea Culpas On Illegal Downloads

Includes: ORCL, SAP
by: SoundView Technology Group

Back when Oracle (NASDAQ:ORCL) vs. SAP (NYSE:SAP) hit the fan in late March/early April, I said some quiet settlement would occur on some day when no one was paying attention to information-technology [IT] news, such as Christmas Eve or July 3rd. Well, I was half right.

Wednesday was that slow news day in the U.S. As a result, there were only hesitant questions from journalists and investment analysts at the initial SAP press conference on this subject [another was held at 11:00 AM EDT on July 3]. SAP’s answers were equally tepid, mostly the standard “can’t comment on ongoing litigation” or wording almost identical to the court filing. Neither SAP’s oral or written responses were the mea culpas they should have been.

In its response to the District Court, SAP admits on the first page: “certain downloads… may have erroneously exceeded [its] customers’ right of access.” On page 13 of the filing, SAP admits that it ripped off the daylight-savings-time booklet that someone at Oracle wrote. Every other word on this case by SAP and Oracle [and me] is wasted breath.

Disturbingly, in its filing SAP did not really concede wrongdoing. It wasn’t grand theft according to SAP, it was just petty larceny. SAP says it denies Oracle’s claims of “heavy downloads,” using the Bill-Clinton defense that it does not know what the definition of heavy is.

SAP says only Oracle knows if SAP downloaded 10,000 documents it shouldn’t have, so it denies the allegation. Similarly dancing on the head of a pin, SAP makes a distinction between TomorrowNow and corporate headquarters that is likely legally correct but ethically defective. SAP apparently even denies that Oracle software includes databases, middleware and applications.

Coincidentally, a related case has been opened by the United States Department of Justice. Unfortunately from a SAP and Oracle investor’s point of view this is starting to get expensive. Once SAP knew that even one document had been taken inappropriately, it should have used the court system to aggressively reach a settlement.

SAP indicated that it would negotiate according to U.S. court regulations but did not want to concede anything at this point because most of Oracle’s allegations were unfounded. Admittedly, most of Oracle’s narrative reads like a dime novel, but the key allegations appear to be spot on.

Meanwhile, companies such as Rimini Street reap the benefits of Oracle reminding users that third-party options exist out there. Rimini, one of the leading independent maintenance and support providers and founded by the guy that sold TomorrowNow to SAP, I believe, announced Monday that both 2007 new client sales exceeded plan with strong consecutive quarter-over-quarter growth and expansion. Rimini Street officially began serving the Canadian market in Q2.

Rimini says “Thanks Larry.”