October 22, 2009

EU to Oracle: MySQL is sore point in Sun deal

European Commission says Oracle has failed to address its concerns

By James Niccolai

---

Europe's head of competition has criticized Oracle for what she characterised as a lack of cooperation over the investigation of Oracle's planned acquisition of Sun Microsystems, a spokesman for the European Commission said.

In a meeting with Oracle President Safra Catz in Brussels on Wednesday, Competition Commissioner Neelie Kroes "expressed her disappointment that Oracle had failed to produce, despite repeated requests, either hard evidence that there were no competition problems or, alternatively, proposals for a remedy to the competition problems identified by the Commission," a Commission spokesman said.

Kroes said the Commission was willing to move quickly towards a final decision but "underlined that a solution lies in the hands of Oracle," according to the spokesman.

An Oracle spokeswoman said the company declined to comment.

Oracle's proposed US$7.4 billion Sun acquisition was approved by US regulators in August, but two weeks later the Commission announced it would launch an investigation of the deal, citing "serious concerns" about its effects on competition in the database market.

The Commission said it was concerned about Oracle, the world's top seller of database software, taking ownership of MySQL, the leading open source database, which Sun acquired last year.

Oracle had hoped to complete its acquisition of Sun by now, but the Commission's probe, which could last up to 90 days, has held up the deal and may not be completed until January.

Meanwhile Sun's sales have been declining as rivals IBM and Hewlett-Packard take advantage of the uncertainty around Sun's business with aggressive migration plans. Oracle CEO Larry Ellison said last month that Sun is losing $100 million a month while it waits for the deal to close.

Sun announced a big round of layoffs yesterday, citing the additional time it is taking to close the deal with Oracle. The company said it will lay off 3,000 workers around the world over the next 12 months. Oracle is widely expected to make deeper job cuts if the deal closes.

"My first reaction was, this is not a good sign for the Oracle-Sun deal closing soon," Gartner analyst George Weiss said about Kroes' comments Wednesday. Oracle has insisted the deal would not be anticompetitive, and until the two sides can reach an agreement the deliberations will continue. The continued delay has caused "a paralysis of the whole Sun ecosystem," said Gartner analyst Andrew Butler.

"Sun's employees, partners and customers all are suffering as they wait for the deal to close, so that Oracle can issue a product road map that will "provide renewed confidence in at least some of Sun's portfolio," he said.

Oracle is in a difficult position, Weiss said. It will be hard for the company to provide "hard evidence" that the deal would not harm competition. One option is for Oracle to present an analysis of the database market, showing there are other open-source options besides MySQL, such as PostgreSQL and Ingres.

Newsletters

Our Daily & Weekly Newsletters highlight breaking news, vital issues, expert analysis and solutions to help you stay ahead of developments in the industry.