Home opinion-and-analysis Open Sauce EU formally objects to Oracle purchase of Sun

EU formally objects to Oracle purchase of Sun

The European Union has formally objected to Oracle's acquisition of Sun Microsystems, illustrating an obvious fact: the US is a declining financial power.


The last time the EU raised a similar objection was when General Electric tried to buy Honeywell back in 2000; it ended up with the EU blocking the proposed transaction a year later.

The EU's objection to the Oracle-Sun deal is based on its rationale that Oracle will control the popular open source database MySQL if the deal goes through.

Two months ago, when the EU began to probe the deal under the EU Merger Regulation, initial investigations "indicated that the proposed acquisition would raise serious doubts as to its compatibility with the Single Market because of competition concerns on the market for databases."

The EU has to make a final decision by January 19 next year on whether to block the acquisition or not.

In September, the EU put it this way: "The proposed transaction would bring together two major competitors in the market for databases. The database market is highly concentrated with the three main competitors of proprietary databases – Oracle, IBM and Microsoft – controlling approximately 85% of the market in terms of revenue. Oracle is the market leader in proprietary databases, while Sun's MySQL database product is the leading open source database.

"The Commission’s preliminary market investigation has shown that the Oracle databases and Sun's MySQL compete directly in many sectors of the database market and that MySQL is widely expected to represent a greater competitive constraint as it becomes increasingly functional.

"The Commission's investigation has also shown that the open source nature of Sun's MySQL might not eliminate fully the potential for anti-competitive effects. In its in-depth investigation, the Commission will therefore address a number of issues, including Oracle's incentive to further develop MySQL as an open source database."

Former MySQL chief executive Marten Mickos has come out in favour of the deal while others , like Free Software Foundation chairman Richard Stallman, have called for MySQL to be taken out of the deal, probably by selling it to an interested third party.

Ulf Michael Widenius, one of the trio who actually created MySQL and has now set up a fork of the project called MariaDB,  has spoken out as well, saying that Oracle's database was always the chief rival to MySQL. Another fork of MySQL is known as Drizzle.

In a bid to counteract the EU's position, the US deputy assistant attorney-general, Molly Boast, issued a statement saying that the Justice Department had found no reason to object to the acquisition.

"After conducting a careful investigation of the proposed transaction between Oracle and Sun, the Department's Antitrust Division concluded that the merger is unlikely to be anticompetitive. This conclusion was based on the particular facts of the transaction and the Division's prior investigations in the relevant industries," Boast said.

"The investigation included gathering statements from a variety of industry participants and a review of the parties' internal business documents. At this point in its process, it appears that the EC holds a different view. We remain hopeful that the parties and the EC will reach a speedy resolution that benefits consumers in the Commission's jurisdiction.

"Several factors led the Division to conclude that the proposed transaction is unlikely to be anticompetitive. There are many open-source and proprietary database competitors. 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."

Oracle announced the deal in April, leading to speculation as to what the compnay would do with MySQL and Java.

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Sam Varghese

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A professional journalist with decades of experience, Sam for nine years used DOS and then Windows, which led him to start experimenting with GNU/Linux in 1998. Since then he has written widely about the use of both free and open source software, and the people behind the code. His personal blog is titled Irregular Expression.

 

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