EU probes Oracle-Sun deal, cites open-source issue
Tempory? roadblock to the deal:
Source: Technology Review: EU probes Oracle-Sun deal, cites open-source issue
SAN FRANCISCO (AP) -- Oracle Corp. figured its $7.4 billion buyout for Sun Microsystems Inc. could skate through antitrust scrutiny, folding Sun into a technology powerhouse when Sun badly needs the lifeline. Both companies will have to wait.
European Union regulators applied the brakes Thursday, launching a formal antitrust probe that shatters Oracle's goal of completing the acquisition this summer. The U.S. Department of Justice has already approved the deal.
The investigation is focused on whether Oracle will gain too much power in the market for database software, which underpins most things people do in business or on the Web. It helps companies manage and retrieve data they've stored, such as payroll or sales information. Typing in a search term, for example, forces a Web site to scour a database and spit out an answer.
In particular, EU regulators want to make sure Oracle will properly care for Sun's rival open-source database software -- which is freely given away in hopes of selling other products to the users -- or let it wither in favor of Oracle's proprietary software.
EU Competition Commissioner Neelie Kroes said regulators needed to examine whether customers could have fewer choices or see higher prices "when the world's biggest proprietary database company proposes to take over the world's leading open-source database company."
The European Commission now has until Jan. 19 before it makes a final decision to clear the deal or block it. In some cases, such as with Intel Corp., the EU has been a stricter antitrust regulator than the U.S., and often presses companies to make changes that eliminate antitrust worries, such as selling off parts of their business.
Oracle is the database leader with 37 percent of the overall market, followed by IBM Corp. and Microsoft Corp., according to the IDC research firm.
MySQL, a Swedish company that Sun bought for $1 billion last year, is a tiny player, with just 0.2 percent market share, but is the reason European regulators are worried.
The EU officials claim that MySQL, already popular among Web-based companies, will increasingly threaten Oracle's database software as it adds features and attracts more customers. The regulators questioned "Oracle's incentive to further develop MySQL as an open source database."
"In the current economic context, all companies are looking for cost-effective (information-technology) solutions, and systems based on open-source software are increasingly emerging as viable alternatives to proprietary solutions," Kroes said. "The commission has to ensure that such alternatives would continue to be available."
Sun and Oracle declined to comment Thursday.
Is MySQLs market share really so small? I have a hard time believing this.
Originally Posted by LenS
When compared to the giants of the db industry, ya they are that small.
Originally Posted by Zhick
$1 Billion for 0.2% seems a little high. I suspect potential earnings was a factor too. Open source can impact markets far beyond it's initial market share due to potential or perceived penetration. The steady rise of Firefox at the expense of Internet Explorer is a good example, something I'm sure the giants in the DB industry are well aware of. Anything they can do to delay any open source initiative will be done.
Originally Posted by deanjo
This new development could have a lot of unforeseen effects, as the cnet article below goes into. I agree with the author, it's politics. Players standing to benefit from the delay are feeding the pols a lot of exaggerated, biased, and misinformation that plays on their beliefs and I expect IBM, Hewlett-Packard, and others have the ear of a lot of EU pols.
EU fiddles with MySQL while Sun burns | The Open Road - CNET News
by Matt Asay
IBM and Hewlett-Packard could not have planned it any better.
The European Union has launched an in-depth investigation into Oracle's acquisition of Sun, potentially delaying the merger by several more months. In doing so, the EU is actually guaranteeing the demise of Sun's hardware business and gifting it to Sun's competitors by misunderstanding the deal's impact on open source, generally, and on MySQL, specifically.
If you haven't been paying attention, the delay on the merger due to U.S. and EU scrutiny has already resulted in two shockingly bad quarters from Sun. Many enterprise customers are already moving to competitors like IBM because of the uncertainty surrounding the future of Sun products, The Wall Street Journal reports.
Further delay will only compound the problem.
Unlike the U.S., which approved the deal, the EU's Competition Commissioner Neelie Kroes is concerned that Oracle's takeover of Sun will end up diminishing competition:
Systems (like MySQL) based on open-source software are increasingly emerging as viable alternatives to proprietary solutions. The Commission has to ensure that such alternatives would continue to be available.
The Commission doesn't have to. MySQL's open-source license already does. It's open source: even Oracle can't put the open-source genie back in the bottle once it has been released, as MySQL has, under the GNU General Public License.
Consider: some of the folks cheering loudest for the EU to clamp down on the proposed merger, like representatives from Monty Program, have already demonstrated Oracle's (and Sun's) lack of control over MySQL. Monty Program has created a significant fork, or derivative, of the MySQL database, and stands to gain much by the EU's obstructionism.
In delaying the merger, the EU isn't helping MySQL. It's helping its competitors, including Drizzle, OurDelta, MariaDB (Monty Program's fork), Percona, etc.
Competition within and around MySQL is alive and well, regardless of Oracle. After all, as former MySQL CEO Marten Mickos has been saying for years, MySQL has never really competed with Oracle, anyway. MySQL serves (and has helped to create) a very different market: the Web database market.
When asked in April if Oracle's bid for Sun would end up hurting MySQL, Mickos responded: "MySQL works for Web-based applications. Oracle is for older, legacy applications." The vast majority of Oracle's revenue comes from enterprise IT. The vast majority of MySQL's revenue comes from Web companies like Facebook, Google, etc.
MySQL and Oracle don't really compete. They live in two very different markets.
So, if anything, Oracle's acquisition of Sun helps it leverage MySQL into a market--the growing Web database market--that its own technology is ill-equipped to manage. It also gets a lower-cost product with which to bludgeon its real enemy, Microsoft, coupled with a greater footprint in the rising open-source developer community.
Open source is not the enemy in this deal. Microsoft is.
The EU, however, has made itself an enemy to Oracle, Sun, and MySQL by holding up the merger, a situation that will only get worse due to its glacial pace, as CIO.co.uk's editor Martin Veitch suggests. Customers are not the beneficiaries of its intervention: Sun's server competitors like IBM are.
Though the EU purports to be in tune with open source, its meddlesome muddling reveals a surprising ignorance of open source, and shows a complete disregard for MySQL's true market opportunity.
UPDATE @ 6:59 Pacific on 9/4/09: I solicited comment from Gartner vice president and Distinguished Analyst, Donald Feinberg, who had this to say:
The EU does not understand open source. This is clear by using DBMS (MySQL) to extend the deadline. It also is clear that this is an attempt to use MySQL as a cover-up to a political agenda. It is protectionism at its worst.
The EU is entering deep water here, water that it clearly does not adequately understand.
I understand your concern but when it comes to db's there are literally million of applications out there. While MySQL maybe the second largest opensource db out there, when it comes to sheer volume of servers and systems that have been running oracle, IBM and MS db's for a better part of 1/2 century MySQL is relatively small. While MySQL may be the most dominant SQL in NA and maybe EU, there are many other db's that are prominent in other area's of the world. If you were to go to Japan for example the preferred choice is postgrsql. When you look at consumer based appliance sql's for example SQLite dominates and pretty much destroys the competition in marketshare. db's are one of the oldest forms of computing I would venture that even NS's Jet db obliterates MySQL in marketshare. When it comes to db marketshare these are systems that go for an extremely long time before a switchover occurs. Then there are the thousands of truely proprietary solutions as well.
As a side note I find it absolutely hilarious that the EU is basically saying that a proprietary company is responsible for maintaining a opensource project. After all isn't one of the biggest things about opensource the ability to continue support of projects if the company decides to quit supporting it?
I agree completely, though I would characterize it as "business as usual" rather than hilarious. I think the first and last lines of the cnet article sum up the situation pretty well:
Originally Posted by deanjo
"IBM and Hewlett-Packard could not have planned it any better. "
"The EU is entering deep water here, water that it clearly does not adequately understand."
Just another case of pols not really understanding the issue, but understanding very well what some of their deep pocket contributors want.
Simple. Sun and Oracle do business in Europe. They have to abide by European laws for the businesses they have there.
Originally Posted by L33F3R
they prolly do business in Africa but we dont see African countries caring about market competition. As bad as a lack of competition is, such is a nice position to be in if you own that business.
If the EU thinks that such a merger is wrong then does it not have the ability to bar oracle? We all know that would never happen. If you dont like the food your served you dont eat it, common frigin sense. Ill remember next time I go to europe that when i buy a souvenir i will be subject to whether or not i can look at it back in canada.
They don't have to bar them. They can just fine them $$$$$$$$$$$$$$$$$$. Ask ms. or intel.
Originally Posted by L33F3R
but what i dont understand is why they actually pay it. Lets be honest, you cant make a foreign company pay anything it doesnt want to without the host governments assertion. Only course of action would be to bar the company. Banning companies like M$ or Intel would collapse any economy without question.
Originally Posted by LenS
Regardless of playing politics, its a matter of freedom. Freedom to make as much as you want. Like it or not, greed is the foundation of all of our economies and will continue to be so.
No but they do have a large sum of money they wish to hide in your bank account if you forward your banking info so they can deposit it....
Originally Posted by L33F3R
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