EC To Object To Oracle’s Sun Acquisition, Say Reports

The European Commission (EC) may object to Oracle’s Sun acquisition, because the deal includes the popular free MySQL database, according to reports in the Financial Times and Handelsblatt

The EC has delayed the purchase, pending investigation of the potential conflict of interest in the world’s largest commercial database company owning its largest open source competitor, and EC policy advisor Florian Mueller has argued strongly that MySQL should be kept out of Oracle’s hands.

According to the FT and Handelsblatt, a so-called “formal objection” to the proposed acquisition may emerge from the European Commission.

Oracle CEO and founder Larry Ellison doesn’t see it this way, saying at the recent Oracle OpenWorld conference in San Francisco: “MySQL in no way competes with our databases. It has its own market and following. The main competitor is Microsoft [SQL Server], and that’s OK by us.”

MySQL was bought by Sun in January 2008 for $1 billion and is ticketed to become part of Oracle, the world’s largest commercial database maker and merchant. Some — but not all — MySQL stakeholders also cite the conflict of interest here, and that’s what the EC’s objection is all about.

If a formal objection indeed is lodged by the EC, then the acquisition process takes longer, more time and money are lost forever, and more jobs are liquidated at Sun, which has been cutting staff continuously for a few years.

Oracle will still be free to appeal any such objection immediately.

Oracle is investing $7.4 billion (£4.5bn) into this venture, which would immediately transform the Redwood City, California.-based enterprise database and middleware company into one of the world’s top 10 IT systems providers. Meanwhile, Ellison claims Sun is losing $100 million (£60m) and thousands of jobs a month as customers old and new put sales on hold until they find out the fate of the company: Will it go to Oracle, or not?

The EC holds a great deal of power here. Oracle does business in just about every EU nation and stands to lose a huge amount of business if the EC does not bless the deal. The delay is also causing Oracle difficulties in dealing within Russia.

The US Department of Justice, which enforces antitrust laws in its own vast jurisdiction, sanctioned the transaction three months ago, but that hasn’t soothed the minds of EC Competition Commissioner Neelie Kroes and some of her fellow commissioners about the future of MySQL, the freely available and popular database for Web sites that companies such as Facebook, Google and Yahoo use to run their businesses.

MySQL is a European creation, one of the most successful in recent IT history. Kroes and the EC do not want a commercial database company — Oracle — owning its largest open source competitor.

Kroes has said several times she needs to see proof that MySQL can continue to develop and be innovative under Oracle’s ownership. Oracle, she said, has yet to provide that.

The EC has set a date of 19 Jan. 2010, to make a final decision whether to sanction the deal, although a determination could come sooner than that.