If Oracle Bought Every Open Source Company...


Recently, there was an interesting rumour circulating that Oracle had a war chest of some $70 billion, and was going on an acquisition spree.

Despite the huge figure, it had a certain plausibility, because Oracle is a highly successful company with deep pockets and an aggressive management. The rumour was soon denied, but it got me wondering: supposing Oracle decided to spend, if not $70 billion, say $10 billion in an efficient way: how might it do that? And it occurred to me that one rather dramatic use of that money would be to buy up the leading open source companies – all of them.

That would be eminently possible, since the largest such company - Red Hat – is worth around $6.25 billion; the other candidates would be fractions of that sum. And since Oracle would only need to buy one company per sector – one for enterprise content management (ECM), one for CRM, one for business information (BI) etc. - and already owns MySQL, the total required for a complete "set" would be relatively modest. It could certainly afford to do it. But why might it want to take this course of action?

Offering extremely low-cost ancillary programs like ECM, CRM and BI would allow it to enter new markets which are currently unable to afford the high-end Oracle database application. It could do that by offering MySQL as a kind of “taster”: it wouldn't be losing any revenue, since these companies wouldn't have bought the main Oracle database offering anyway. And once they are happy using MySQL and other Oracle open source products, some might eventually be persuaded to migrate to the “full” database application.

There would be other benefits, too. It would give Oracle control over a wide range of applications that it could use against its main rivals. Even if it did not make much money from these open source offerings, it could reduce the amount others made from their high-cost proprietary applications. That, in turn, would reduce their scope for competitive action against Oracle.

Owning all the main open source programs would give Oracle increased influence with other players in the computing world – for example, hardware manufacturers who might want to bundle apps, system integrators etc. Rebranding the open source programs as part of the Oracle family, and then encouraging their wide distribution as free downloads would provide valuable marketing and boost the Oracle brand – not least in developing countries unable to afford the main Oracle enterprise offerings.

It's clear, then, that many advantages would accrue to Oracle from swooping in and buying up all the leading open source companies. But even a cursory glance shows that it doesn't look such good news for the free software world.

First, it would effectively replace a dynamic ecosystem of many smaller players with one dominant entity. Worse, that owner would be aiming to use open source for its own benefit, rather than nurturing the open source ecosystem as a whole.

It would allow Oracle to dictate terms to practically any company involved in the open source business world. It could unilaterally set standards – including non-open ones – in the open source domain. It would mean that it employed a large proportion of all open source coders that were paid to work on free software. Clearly, this would be a monoculture just as bad – albeit very different – from the Microsoft one that open source was supposed to offer an alternative to.

So, let's look at what prevents such a cataclysmic development from taking place. Sadly, there's little that the companies themselves could do. The ones that are publicly traded could hardly resist, and even those that remain privately held would find their backers quite happy to accept large wads of foldables from Oracle: after all, cashing in is precisely why venture capitalists invest in startups in the first place, and if Oracle made them an offer they couldn't refuse, they wouldn't.