The European Commission formally issued a Statement of Objections yesterday listing its reasons for not approving the acquisition of Sun Microsystems by Oracle. There was really only one – concern that Oracle would reduce support for the mySQL open source database management system and thereby reduce competition. Oracle’s proprietary 11g DBMS is the market leader so on the surface the accusation seems understandable.
Oracle thought it was home free last summer when the US Justice Department approved the acquisition. This endorsement remains Oracle’s strongest argument for approval. The formal statement yesterday was not a ruling, just a formal written summary of the reasons for holding up approval. An official ruling is likely months away. This gives Oracle time to argue its case and line up additional support, but comes at a high price.
Sun Microsystems has been losing an average of $100 million dollars per month during the delay. Sales that might otherwise have gone to Sun are being awarded to IBM, HP and other competitors. The server market share that is Sun’s most valuable asset is slowly being eroded during the delay.
It is hard to imagine Oracle giving up easily on this deal. If it must, Oracle may agree to sell or spin off mySQL. Ironically, mySQL was a fairly recent acquisition by Sun and only a minor consideration in the value of Sun to Oracle. A time consuming fight over this part of the deal could cost Oracle far more than owing mySQL will ever bring in. In order to get the deal closed soon Oracle will therefore likely agree to whatever restrictions the EC demands.
Closing the Sun acquisition (with or without mySQL) is Larry Ellison’s top priority. Doing so has the potential to change the competitive structure of the IT industry. The outcome of this fight between Oracle and the EC will have a profound impact on the JD Edwards community because it will define what kind of a company Oracle is in the future.
As developments occur we will continue to report them. Once a final resolution occurs we will assess the long-term implications for our community.