AllThingsD » EC

EU to Rule on Google, Motorola Mobility Deal on February 13

John Paczkowski — Thu, 19 Jan 2012 18:01:38 +0000

European Union regulators will soon decide whether or not to clear Google’s proposed acquisition of Motorola Mobility. After suspending its review in early December to seek more information from the companies, the European Commission has begun mulling the deal anew, and set for itself a new deadline: Feb. 13. The EC’s review of the acquisition is but one of a handful. Regulators in the U.S. and China are also assessing it.

Microsoft to Google: Quit Whining Ya Big Baby

John Paczkowski — Sat, 27 Feb 2010 00:00:56 +0000

Microsoft may be quietly chuckling over the European Commission’s decision to look into antitrust complaints against Google, but it’s not going to take credit for it. In a post to the company Web site, Dave Heiner, Microsoft vice president and deputy general counsel, took issue with Google’s suggestion last week that two companies with ties to Microsoft are driving this thing.

“This week came news that the European Commission is investigating various aspects of Google’s conduct, including claims of retaliation, exclusivity and manipulation of search results to disadvantage rivals,” Heiner wrote. “Google’s public response to this growing regulatory concern has been to point elsewhere–at Microsoft. Google is telling reporters that antitrust concerns about search are not real because some of the complaints come from one of its last remaining search competitors….[But] ultimately what’s important is not who is complaining, but whether or not the challenged practices are anticompetitive.”

A great point, and one that makes Google’s inflammatory out-of-the-gate finger-pointing earlier this week seem a bit hysterical. And if Microsoft’s European properties did spur the EC’s preliminary investigation into Google, so what? As Heiner wryly notes, “Complaints in competition law cases usually come from competitors”–“dumbass” here is, presumably, implied.

So does Microsoft (MSFT) feel Google (GOOG) is worthy of antitrust scrutiny? Well, what do you think?

“Both search and online advertising are increasingly controlled by a single firm, Google,” Heiner wrote. “…Microsoft would obviously be among the first to say that leading firms should not be punished for their success. Nor should firms be punished just because a particular business practice may harm a rival–competition on the merits can do that, too. That is a position that Microsoft has long espoused, and we’re sticking to it. Our concerns relate only to Google practices that tend to lock in business partners and content (like Google Books) and exclude competitors, thereby undermining competition more broadly. Ultimately the competition law agencies will have to decide whether or not Google’s practices should be seen as illegal.”

Well, there you go. Obviously, the gloves are coming off here. Too bad for Google that it doesn’t take a punch very well.

Why The Big Smile, Mr. Ballmer? Has Google Been Slapped With an Antitrust Probe in Europe?

John Paczkowski — Wed, 24 Feb 2010 08:01:28 +0000

And there it is, Google’s European antitrust review.

The European Commission has opened an investigation into Google’s dominance of the search and search advertising markets in Europe at the behest of three complainants: French legal search engine ejustice.fr, U.K. price-comparison venture Foundem, and Ciao!, a product review and price-comparison site.

Perhaps unsurprisingly, the latter two have ties to Microsoft. Ciao is a subsidiary of Google’s Redmond rival and Foundem is a member of Microsoft-funded organization ICOMP.

In any event, the three companies have all accused Google (GOOG) of undermining their business in some way, either by unfairly demoting their rankings in its search results or by saddling them with onerous terms and conditions. And the European Commission has taken their complaints seriously enough to look into them.

The inquiry is at an “early, fact-finding stage” and may not result in further action, but it has clearly got Google worried. It was the EC, after all, that ultimately beat Microsoft (MSFT) into submission, forcing the company to alter its business practices.

In a post to Google’s Public Policy Blog entitled “Committed to Competing Fairly,” Julia Holtz, the company’s senior competition counsel, denied the charges against Google, saying the company has done nothing wrong.

“Though each case raises slightly different issues, the question they ultimately pose is whether Google is doing anything to choke off competition or hurt our users and partners,” she wrote. “This is not the case. We always try to listen carefully if someone has a real concern and we work hard to put our users’ interests first and to compete fair and square in the market.”

EU Approves Oracle-Sun Deal

John Paczkowski — Thu, 21 Jan 2010 12:10:54 +0000

The European Commission this morning unconditionally approved Oracle’s proposed acquisition of Sun Microsystems, removing one of the last hurdles to the $7.4 billion deal. Digital Daily reported Monday that people close to the companies expected the EC to clear the deal by today.

“I am now satisfied that competition and innovation will be preserved on all the markets concerned,” European Competition Commissioner Neelie Kroes said in a statement. “Oracle’s acquisition of Sun has the potential to revitalize important assets and create new and innovative products.”

All that remains in the planned merger’s way now is approval from Chinese and Russian antitrust authorities, and Oracle (ORCL) expects them both to clear it unconditionally. That being the case, the company has scheduled an event to discuss its strategy for absorbing Sun (JAVA) for the morning of Jan. 27. CEO Larry Ellison will host the event, which will be Webcast live from 9 am to 2 pm Pacific Time.

The EC’s full statement, below.

Mergers: Commission clears Oracle’s proposed acquisition of Sun Microsystems

The European Commission has approved under the EU Merger Regulation the proposed acquisition of US hardware and software vendor Sun Microsystems Inc. by Oracle Corporation, a US enterprise software company. After an in-depth examination, launched in September 2009 (see IP/09/1271 ), the Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

Competition Commissioner Neelie Kroes said: “I am now satisfied that competition and innovation will be preserved on all the markets concerned. Oracle’s acquisition of Sun has the potential to revitalise important assets and create new and innovative products.”

Oracle is a supplier of business software, including middleware (i.e. software that connects software components applications), database software, enterprise application software and related services.

Sun provides network computing infrastructure solutions that include computer systems, software, storage and services. In 2008, Sun acquired the open source database, MySQL.

The Commission’s in-depth investigation, opened on 3 September 2009 assessed whether the acquisition of the world’s leading open source database MySQL by Oracle, the leading proprietary database vendor, would lead to a significant impediment of effective competition within the EEA. The database market is highly concentrated with the three main proprietary database vendors – Oracle, IBM and Microsoft – accounting for approximately 85% of the market in terms of revenue.

Although Sun’s share of the database market in terms of revenue is low, as users of MySQL can download and use the database for free, given its open source nature, the Commission’s investigation confirmed MySQL’s position as the leading open source database. The Commission’s investigation therefore focussed on the nature and extent of the competitive constraint that MySQL currently exerts on Oracle and whether this would be affected by the proposed transaction.

The Commission’s in-depth investigation showed that although MySQL and Oracle compete in certain parts of the database market, they are not close competitors in others, such as the high-end segment.

Given the open source nature of MySQL, the Commission also assessed Oracle’s ability and incentive to remove the constraint exerted by MySQL after the merger and the extent to which this constraint could, if necessary, be replaced by other actors on the database market.

The Commission’s investigation showed that another open source database, PostgreSQL, is considered by many database users to be a credible alternative to MySQL and could be expected to replace to some extent the competitive force currently exerted by MySQL on the database market. In addition, the Commission found that ‘forks’ (branches of the MySQL code base), which are legally possible given MySQL’s open source nature, might also develop in future to exercise a competitive constraint on Oracle in a sufficient and timely manner. Given the specificities of the open source software industry, the Commission also took into account Oracle’s public announcement of 14 December 2009 of a series of pledges to customers, users and developers of MySQL concerning issues such as the continued release of future versions of MySQL under the GPL (General Public Licence) open source licence. Oracle has already taken action to implement some of its pledges by making binding offers to third parties who currently have a licensing contract for MySQL with Sun to amend contracts. This is likely to allow third parties to continue to develop storage engines to be integrated with MySQL and to extend the functionality of MySQL.

The Commission also examined the potential impact of Oracle’s acquisition of the intellectual property (IP) rights connected to the Java development platform in the context of the proposed transaction.

It found that Oracle’s ability to deny its competitors access to important IP rights would be limited by the functioning of the Java Community Process (JCP) which is a participative process for developing and revising Java technology specifications involving numerous other important players in the IT industry, including Oracle’s competitors.

The Commission also found that Oracle would not have the incentives to restrict its competitors’ access to the Java IP rights as this would jeopardise the gains derived from broad adoption of the Java platform and therefore the proposed transaction would raise no competition concerns in respect of the licensing of IP rights connected with Java.

The Commission also examined the potential effects arising from the proposed transaction on the market for middleware and in the ‘IT stack’, where the merger would strengthen Oracle’s presence. It concluded that no competition concerns would arise in these areas in the light of the merged entity’s market shares and prevailing competition in the markets.

Apple Tablet on Tap

John Paczkowski — Tue, 19 Jan 2010 19:00:26 +0000

[ See post to watch video ]

EU Poised to Approve Oracle-Sun Deal

John Paczkowski — Mon, 18 Jan 2010 21:30:37 +0000

The European Commission’s approval of Oracle’s $7.4 billion acquisition of Sun is imminent. Though EU regulators have until late January to make their decision, sources close to both companies tell me they expect approval this week, perhaps even as early as Wednesday or Thursday. They caution, however, that the EC is nothing if not mercurial; there’s always a chance it could fail to reach a quorum, in which case, approval will fall closer to the review deadline of Jan 27.

Either way, the deal is likely to officially close in early February. And when it does, Oracle (ORCL) and Sun (JAVA) will be well prepared. “The integration team have been working very hard to complete all of the planning and executives on both sides of the merger believe that deal will be approved,” one source told me. “The majority of the hiring decisions have been made and the bulk of the product decisions and organization structure is completed.”

As part of its preparation, Oracle has written three email announcements, which it plans to distribute to Sun employees. The first, a congratulatory note for employees who will keep their jobs after the transition. The second, a notice of termination alerting employees who will lose their jobs. The third, an offer of a temporary position working through the transition is most likely to be distributed to employees in finance and human resources.

For rank-and-file Sun employees, the second notice is obviously ugly news. Not so for executives: The cash payout at the VP and officer level for being let go is quite generous, and I’m told a certain number of “howls of whoopee” can be expected from those in senior positions hoping for a pink slip.

And just how many pink slips are to be distributed? That’s unclear. I’ve heard from some sources that a significant reduction in workforce is almost certain. Others tell me “layoffs are not going to be anywhere near predictions.”

For the sake of Sun’s long-suffering employees, let’s hope it’s the latter.

Reached for comment, Sun declined to offer on”. “Sorry, we do not comment on rumors or speculation,” a spokesperson told me.

Tussle in Brussels: The EC’s Oracle-Sun Hearing, End Game

John Paczkowski — Mon, 14 Dec 2009 17:00:44 +0000

“Larry Ellison: We’re a big fan of open source–in fact, we’ve had the major transaction engine to MySQL–it’s something Oracle bought years ago and has invested in it to a higher level than it was invested in before. We believe in open source, we’re a huge supporter of Linux. MySQL and Oracle do not compete–at all….There’s a long list of database machines and database software we compete against–we never compete against MySQL. They’re both called databases, they address very different markets–furthermore, it’s open source.

Ed Zander: If they ask you to spin it off, will you?

LE: No.

EZ: If they told you to spin it off, would you?

LE: No. We’re not gonna spin it off. The U.S. government cleared this, we think the Europeans are gonna clear this, and we are not going to spin anything off.”

– Excerpt from Oracle CEO Larry Ellison’s September Churchill Club interview with former Sun CEO Ed Zander

Looks like Oracle has managed to ease European regulators’ antitrust concerns over its $7 billion acquisition of Sun–perhaps even enough for them to approve the thing.

This morning, Oracle (ORCL) and the European Commission both said they have had “constructive discussions” about the company’s plans for Sun (JAVA) and more specifically, its open-source MySQL database software.

Driving those discussions: A 10-point list of commitments from Oracle intended to ensure that MySQL will remain a competitive force in the database market. In the list, Oracle spells out plans for the database software, promising to boost spending on research and development, refrain from seeking commercial licenses from makers of MySQL storage engines and to establish a customer advisory board of MySQL users.

These concessions went over well with the EC, which is clearly warming to the idea of a Sun-Oracle union. “Today’s announcement by Oracle of a series of undertakings to customers, developers and users of MySQL is an important new element to be taken into account in the ongoing proceedings,” said the EC in its statement.

“In particular,” the EC continued, “Oracle’s binding contractual undertakings to storage engine vendors regarding copyright non-assertion and the extension over a period of up to 5 years of the terms and conditions of existing commercial licenses are significant new facts.”

European Union regulators have until late January to make their decision.

Tussle in Brussels: The EC’s Oracle-Sun Hearing, Day 1

John Paczkowski — Thu, 10 Dec 2009 20:48:48 +0000

Oracle is defending its planned acquisition of Sun Microsystems before the European Commission this week, and according to the company’s legal team, the first day of arguments went quite well. “I am extremely happy,” Oracle attorney Thomas Vinje said of the first half of the two-day hearing in Brussels.

And evidently for good reason. Oracle (ORCL) has managed to muster a substantial list of customers willing to argue that its purchase of Sun (JAVA), and more specifically, of Sun’s open-source MySQL database software, will not undermine competition in the database market.

Among the eight companies helping Oracle defend the deal: Vodafone (VOD), the U.K.’s National Health Service, Sabre Holdings and Spain’s Banco Bilbao Vizcaya Argentaria (BBV). “There can’t be a better voice than customers,” Vinje said. “The customers said that there is robust competition in the market.”

But that’s today. Tomorrow will be a different story entirely. Tomorrow, Microsoft (MSFT) and SAP (SAP) will comment on the $7 billion deal, and neither company is particularly fond of it, or of Oracle for that matter. Both will presumably argue that Oracle’s acquisition of Sun could hinder MySQL’s development since Oracle has little reason to support a database technology that competes with its own–though some, like IBM, disagree.

One last bit of news worth noting, here. European Competition Commissioner Neelie Kroes seems confident the EC will resolve its differences with Oracle. “I am still optimistic that we can reach a satisfactory outcome that will ensure that there is no adverse impact on effective competition in the European market,” she told a news conference.

More tomorrow.

EU Hearing on Oracle-Sun Set for Dec. 10

John Paczkowski — Wed, 25 Nov 2009 20:16:24 +0000

Come early December, Oracle will meet with European Commission regulators to urge their approval of its merger with Sun Microsystems. “Two people with knowledge of the matter” tell Reuters that “Oracle has asked for a hearing which has been fixed for Dec. 10.”

Should make for an interesting meeting given Oracle’s refusal to take the EC’s concerns about the future of Sun’s MySQL database seriously. Certainly, it’s difficult to imagine Oracle (ORCL) caving to the Commission’s demands when it has criticized the group’s findings as a “profound misunderstanding” of the database market and open source.

And if not that, then what? Would Oracle abandon the deal instead? That too seems unlikely because it would mean delaying CEO Larry Ellison’s plan to transform Oracle into the next IBM (IBM). As Ellison said in October, “T. J. Watson’s IBM was the greatest company in the history of enterprise in America because its combination of hardware and software was running most of the enterprises on the planet. We think with the combination of Sun technology and Oracle technology we can succeed and beat IBM. That’s our goal.”

Given the EC’s concerns about the Sun (JAVA) acquisition and Oracle’s refusal to address them, what other option is there?

U.S. Senators Tell EU to Approve Oracle-Sun Deal…Typical Americans

John Paczkowski — Wed, 25 Nov 2009 14:01:28 +0000

With Sun Microsystems beginning to founder as it awaits European Commission clearance of its acquisition by Oracle, a group of U.S. senators is urging the EC to speed up its approval of the deal. In an open letter, the group–led by Senators John Kerry (D., Mass.) and Orrin Hatch (R., Utah)–essentially tells European regulators to “get on with it,” warning that further delay could result in additional layoffs for Sun’s already much diminished workforce.

“Sun Microsystems’ financial position has become more precarious and the commission’s inquiry has continued,” the letter states. “Some have raised concerns over the company’s ability to continue to employ its thousands of workers. Accordingly, we respectfully request the European Commission complete its investigation of this transaction as quickly as possible.”

An earnest (and surprising) appeal. But it’s hard to see it going over well with the EC, which issued a formal objection to the deal Nov. 9 and has been carping about Oracle’s (ORCL) lack of cooperation in its investigation for months now.

Meanwhile, Sun (JAVA), which reported a net loss of $2.2 billion for its 2009 fiscal year, compared with a net loss of $403 million for 2008, continues to lose about $100 million per month as it waits for the deal to close.

Below, the senators’ letter in full:

Chargé d’Affaires Angelos Pangratis
Acting Head of Delegation
Delegation of the European Commission to the United States
2300 M Street, NW
Washington, DC 20037

Dear Chargé d’Affaires Pangratis:

As fellow government officials committed to the principle that competition is the cornerstone of healthy economic growth, we would like to take this opportunity to share our thoughts with you as to the proposed acquisition of Sun Microsystems, Inc. by Oracle Corporation. In addition, due to Sun Microsystems’ deteriorating financial condition and the possible negative effect on employment of the company’s workforce, we respectfully request the European Commission expedite the completion of its investigation into this transaction.

The United States Department of Justice, after an intensive investigation, closed its inquiry into this transaction without taking any action. In fact, the Justice Department did not find documentary evidence that this acquisition would harm competition. We recognize that the European Commission has a sovereign right to thoroughly investigate transactions where corporations utilize the European Union’s marketplace. Further, it is our understanding the Commission is concerned about competition in the database software market. However, we have been informed by Sun Microsystems that their subsidiary, which competes in this specific market, generates only €17 million in revenue and that the same market has competitors with capitalizations of tens of billions of Euros.

Unfortunately, Sun Microsystems’ financial position has become more precarious and the Commission’s inquiry has continued. Some have raised concerns over the company’s ability to continue to employ its thousands of workers. Accordingly, we respectfully request the European Commission complete its investigation of this transaction as quickly as possible.

Thank you for your attention to this matter.

Google Uncrates Chrome

John Paczkowski — Fri, 20 Nov 2009 18:00:19 +0000

[ See post to watch video ]

Oracle Blinks

John Paczkowski — Fri, 20 Nov 2009 13:00:29 +0000

The European Union’s formal objection to Oracle’s proposed acquisition of Sun (JAVA) has evidently transformed the database giant’s intransigence into grudging agreeability. The EU has extended the deadline for approval of the $7.4 billion merger to Jan. 27 from Jan. 19 at Oracle’s (ORCL) request.

Seems that Oracle has decided that perhaps petulantly refusing to cooperate with the European Commission’s antitrust probe isn’t the best course of action here and has asked for “the opportunity to further develop its arguments in relation to the commission’s concerns.” Presumably, the company wouldn’t need such time if the EC’s objections were as baseless as it has argued. The standoff between the two, then, would appear to be over and we may see a solution to the matter early next year.

Intel, AMD Announce Dual Core Litigation Settlement

John Paczkowski — Thu, 12 Nov 2009 14:36:38 +0000

Wow. Intel and AMD’s seemingly endless legal battles have finally ended. The two companies said early Thursday that they have reached a comprehensive agreement that resolves their many antitrust and patent disputes.

Under terms of the agreement, Intel (INTC) will pay AMD (AMD) $1.25 billion (nearly a quarter of AMD’s $4.46 billion market cap) and agree to “abide by a set of business practice provisions” presumably crafted to temper Intel’s allegedly anticompetitive practices. Here are details of the agreement:

Business Practices Provisions Prohibit Intel From:

Offering inducements to customers in exchange for their agreement to buy all of their microprocessor needs from Intel, whether on a geographic, market segment, or any other basis (Section 2.1.1.a)

Offering inducements to customers in exchange for their agreement to limit or delay their purchase of microprocessors from AMD, whether on a geographic, market segment, or any other basis (Section 2.1.1.b)

Offering inducements to customers in exchange for their agreement to limit their engagement with AMD or their promotion or distribution of products containing AMD microprocessors, whether on a geographic, channel, market segment, or any other basis (Section 2.1.2a-b)

Offering inducements to customers in exchange for their agreement to abstain from or delay their participation in AMD product launches, announcements, advertising, or other promotional activities (Section 2.1.2.b)

Offering inducements to customers or others to delay or forebear in the development or release of computer systems or platforms containing AMD microprocessors, whether on a geographic, market segment, or any other basis (Section 2.2.2 and 2.1.2)

Offering inducements to retailers or distributors to limit or delay their purchase or distribution of computer systems or platforms containing AMD microprocessors, whether on a geographic, market segment, or any other basis (Section 2.2.1)

Withholding any benefit or threatening retaliation against anyone for their refusal to enter into a prohibited arrangement such as the ones listed above.

In return, AMD will drop all its pending litigation against the company and pull out of regulatory complaints worldwide. Finally, the two rivals will enter into a five-year patent cross-licensing agreement.

In a joint statement, the companies said, “While the relationship between the two companies has been difficult in the past, this agreement ends the legal disputes and enables the companies to focus all of our efforts on product innovation and development.”

Interesting. Clearly, AMD CEO Dirk Meyer’s earlier comments about the ratification of its complaints about Intel’s business practices and the company’s hope for a future in which AMD’s “ability to succeed as a business is really determined by the quality of our products and customer relationships” was quite prefigurative.

During a call to discuss the settlement, Meyer said the accord marks the beginning of a new era, one that changes the game for AMD. “It is an important milestone for us, for our customers, our partners, and most importantly–for consumers and businesses worldwide,” Meyer said.

“It is the culmination years of litigation and regulatory engagement, and we are optimistic that it will usher a new era for our industry,” the CEO continued, further noting that change may not be immediate. “We recognize that it will take time for people to understand how the operating conditions in processor business have changed–but make no mistake–they have changed….We look forward to healthy competition with the mutual respect one would expect between world-class competitors.”

It is unclear if the settlement will affect the antitrust suit brought against Intel by New York Attorney General Andrew Cuomo last week as Cuomo hasn’t yet commented. But the European Union says it will not change its decision in May to fine Intel a record $1.5 billion for anticompetitive behavior.

“The European Commission takes note that Intel and AMD have settled all their litigation and that Intel is paying AMD compensation of one-and-quarter billion dollars,” said an EC spokesman. “But Intel has an ongoing obligation to comply with the commission’s antitrust decision and with EU competition law. The commission continues to vigorously monitor Intel’s compliance with its obligations under the EU antitrust decision.”

Morgan Stanley to EU: Whatever Larry Wants, Larry Gets, and Sun Is No Exception

John Paczkowski — Tue, 10 Nov 2009 20:48:39 +0000

For Oracle, whose acquisition of Peoplesoft and Siebel Systems cleared in Europe without conditions, news that the European Commission issued formal objections to its purchase of Sun was likely particularly galling.

According to Oracle (ORCL) CEO Larry Ellison, Sun (JAVA) is already losing $100 million a month as it waits for regulatory approval, and judging from the price of the company’s stock today, it may be losing even more than that. Shares in Sun slid to $8.11–about 15 percent below Oracle’s offer price and a far cry from the $9.18 they hit in mid-October.

Clearly, investors are alarmed by this latest turn of events, though industry observers say there’s little reason for them to be. Morgan Stanley, for example, believes Oracle’s acquisition of Sun will win EU approval with few, if any, modifications to the MySQL database software about which regulators are so concerned.

“Based on our diligence, we believe the EC is likely to approve the deal with no remedies or remedies pertaining to MySQL’s licensing,” the research house said in a note to clients today. “It is highly unlikely that Oracle restructures the deal (e.g. spins MySQL) or walks away.”

Morgan Stanley’s call: The deal will go through and at $9.50 per share. As the firm notes, the EU hasn’t blocked a U.S.-based transaction since GE/Honeywell in 2001.

EU Objects to Oracle-Sun Deal

John Paczkowski — Mon, 09 Nov 2009 22:43:06 +0000

The European Commission today issued a so-called Statement of Objections over Oracle’s (ORCL) proposed acquisition of Sun Microsystems (JAVA). Disclosed in a regulatory filing by Sun, the document gives formal voice to the EC’s concerns over the fate of Sun’s open-source MySQL database. From Sun’s filing:

On November 9, 2009, the European Commission issued a statement of objections relating to the acquisition of Sun by Oracle Corporation. The Statement of Objections sets out the Commission’s preliminary assessment regarding, and is limited to, the combination of Sun’s open source MySQL database product with Oracle’s enterprise database products and its potential negative effects on competition in the market for database products. The issuing of a Statement of Objections allows addressees to present arguments in response to the Commission’s preliminary assessment of the competitive effects of a notified transaction. A Statement of Objections is a preparatory document that does not prejudge the European Commission’s final decision. Any final decision by the European Commission is subject to appeal to the European Court of First Instance.

Indignant that the EC would dare to bring the $7 billion deal into question, Oracle vowed to take it to the mat in a harshly worded rebuttal:

Oracle’s acquisition of Sun is essential for competition in the high end server market, for revitalizing Sparc and Solaris and for strengthening the Java development platform. The transaction does not threaten to reduce competition in the slightest, including in the database market. The Commission’s Statement of Objections reveals a profound misunderstanding of both database competition and open source dynamics. It is well understood by those knowledgeable about open source software that because MySQL is open source, it cannot be controlled by anyone. That is the whole point of open source.

The database market is intensely competitive with at least eight strong players, including IBM, Microsoft, Sybase and three distinct open source vendors. Oracle and MySQL are very different database products. There is no basis in European law for objecting to a merger of two among eight firms selling differentiated products. Mergers like this occur regularly and have not been prohibited by United States or European regulators in decades.

The U.S. Department of Justice carefully reviewed the proposed acquisition during the normal Hart-Scott-Rodino review and considered it again when the European Commission initiated a second phase review. On both occasions the Justice Department came to the conclusion that there is nothing anticompetitive about the deal, including specifically Oracle’s acquisition of the MySQL database product. The U.S. Department of Justice approved the acquisition without conditions and terminated the waiting period under the Hart-Scott-Rodino Act on August 20, 2009.

Sun’s customers universally support this merger and do not benefit from the continued uncertainty and delay. Oracle plans to vigorously oppose the Commission’s Statement of Objections as the evidence against the Commission’s position is overwhelming. Given the lack of any credible theory or evidence of competitive harm, we are confident we will ultimately obtain unconditional clearance of the transaction.

And Oracle will evidently pursue its case with help from the U.S. Department of Justice’s Antitrust Division, which also issued a statement on the EC’s move today:

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. 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.

The Department and the European Commission have a strong and positive relationship on competition policy matters. The two competition authorities have enjoyed close and cooperative relations. The Antitrust Division will continue to work constructively with the EC and competition authorities in other jurisdictions to preserve sound antitrust enforcement policies that benefit consumers around the world.

Would Oracle Ever Abandon Its Bid for Sun?

John Paczkowski — Mon, 09 Nov 2009 20:22:44 +0000

Would Oracle ever abandon its bid for Sun? And if it did, what might happen to Sun? Thomas Weisel Partners analyst Doug Reid weighs both of these questions in a note to investors today, and his answers are worth considering in light of reports that the European Commission may object to the deal. Though Reid believes Sun’s (JAVA) acquisition by Oracle (ORCL) is still likely, he does see a few other possible scenarios as well. Among them:

A delayed EC review process of the current proposed acquisition, which may end in a rejection left unchallenged by Oracle
A renegotiated deal with Oracle, which would likely exclude MySQL and therefore involve a renegotiated deal price
An offer by IBM (IBM) to buy Sun at a discount to the Oracle offer following a rejection by the EC of the current Oracle deal
A scrapping of the deal by Oracle

Interestingly, Reid feels this last possibility isn’t as disastrous as it might sound. Sun has $1.8 billion in cash, and while its latest results weren’t at all pretty, they did feature improving gross margins.

“Our current thesis on [Sun] assumes the announced [Oracle] acquisition will close, but risks have increased,” Reid wrote. “There remains a risk that the European Commission will provide a ‘statement of objections’ to [Oracle’s] planned acquisition of [Sun] based on concerns regarding [Oracle’s] plans for the MySQL database which [Sun] currently owns. The deadline for such a decision is January 19, 2010 but it is possible that the EC will state objections before the end of the year.”

Elaborating, Reid notes that “Although [Oracle] could likely reduce the risk of a statement of objection–and thus of a delayed or perhaps failed bid for [Sun]–by supplying to the EC an argument to explain why the [Oracle-Sun] deal will not adversely impact competition in the database market, our assumptions around [Sun’s] valuation include increased risk regarding the completion of the [Oracle-Sun] transaction at $9.50….While we believe the currently proposed acquisition by [Oracle] is the most likely outcome for [Sun], we believe other scenarios remain possible, although each is made more difficult by the continued uncertainty around Sun’s fate, and the resulting erosion in customer confidence in Sun.”

European Union Mulling Objection to Oracle-Sun Deal

John Paczkowski — Tue, 03 Nov 2009 23:18:54 +0000

Oracle CEO Larry Ellison is famous for his admiration of “The Art of War,” Sun Tzu’s sixth-century treatise on battle tactics. And the ancient wisdom has served Ellison well in Oracle’s long-running battle with SAP and its hostile bid for PeopleSoft. But it may get him in trouble when it comes to Oracle’s (ORCL) dealings with the European Commission and its inquiry into his company’s planned acquisition of Sun (JAVA).

The Financial Times reports that Oracle’s refusal to offer any concessions to European antitrust regulators may lead them to issue a formal statement of objections to the deal. A complaint could come “within days,” sources tell the FT, though they note that it’s possible that one side or the other will back down before a formal complaint is filed.

If an objection is issued, it will inevitably prolong the entire review process, something Oracle and Sun can ill afford. As Ellison himself recently noted, Sun is losing $100 million a month waiting for approval of the deal.

PREVIOUSLY:

Q: What's the Difference Between Neelie Kroes and Larry Ellison?

John Paczkowski — Wed, 21 Oct 2009 15:40:25 +0000

Q: What’s the difference between European Commission competition watchdog Neelie Kroes and Oracle CEO Larry Ellison?

A: Kroes isn’t losing $100 million a month on Sun Microsystems.

Much as Ellison would like to blame the European Commission for yesterday’s bloodletting at Sun, responsibility lies squarely with Oracle (ORCL). For while Ellison complains that every month the $7.4 billion acquisition is delayed amounts to a $100 million loss for Sun (JAVA), he has not yet given the EC good reason to approve it–at least according Competition Commissioner Neelie Kroes, who’s disappointed with Oracle’s cooperation in the commission’s antitrust probe so far.

Kroes said as much in a recent meeting with Oracle president Safra Catz, according to Jonathan Todd, the commission’s spokesman for competition.

“Kroes expressed her disappointment that Oracle failed to produce, despite repeated requests, either hard evidence that there were no competition problems or a proposal for a remedy to the competition concerns identified by the commission,” Todd told Bloomberg. “Kroes reiterated to Catz the commission’s willingness to move quickly towards a decision but underlined that a rapid solution lies in Oracle’s hands. Either they have to give us the information to prove that our competition concerns are not well founded or offer remedies to satisfy our concerns.”

So if Oracle is looking for a quick solution to the case, it best provide one–otherwise, it’s looking at $100 million a month in losses at Sun.

Q: What's the Difference Between Neelie Kroes and Larry Ellison?

John Paczkowski — Wed, 21 Oct 2009 15:40:25 +0000

Q: What’s the difference between European Commission competition watchdog Neelie Kroes and Oracle CEO Larry Ellison?

A: Kroes isn’t losing $100 million a month on Sun Microsystems.

Kroes said as much in a recent meeting with Oracle president Safra Catz, according to Jonathan Todd, the commission’s spokesman for competition.

So if Oracle is looking for a quick solution to the case, it best provide one–otherwise, it’s looking at $100 million a month in losses at Sun.

Former MySQL Boss to EC: Approve Oracle-Sun Deal

John Paczkowski — Fri, 09 Oct 2009 14:32:08 +0000

Though he resigned earlier this year, former MySQL boss Mårten Mickos still has strong opinions about the open-source database outfit, which was acquired by Sun in 2008. In a letter to the European Commission Thursday, Mickos urged regulators to green-light Oracle’s (ORCL) takeover of Sun (JAVA), arguing that to delay it will only harm competition.

“Every new day of uncertainty is potentially very harmful to the various businesses of Sun, reducing competition in the market,” Mickos wrote. “A delay in the closing of this transaction is therefore only going to work against the respectable goal that you set out to achieve when launching the probe into this acquisition.”

Oracle, says Mickos, has far better reason to ramp-up Sun’s MySQL business than it does to harm it.

“Even if Oracle, for whatever reason, would have malicious or ignorant intent regarding MySQL (not that I think so), the positive and massive influence MySQL has on the DBMS market cannot be controlled by a single entity–not even by the owner of the MySQL assets. The users of MySQL exert a more powerful influence in the market than the owner does,” he continues. “Many expected Oracle to harm MySQL as far back as 2005, when they acquired the InnoDB storage engine that plays a crucial role for many MySQL customers. And yet Oracle increased their investment in InnoDB since that time, making MySQL a stronger player in the market.”

An interesting argument and one that appears to offer Mickos little personal gain. Now an entrepreneur in residence at Benchmark Capital, Mickos says he has no financial interest in the transaction. So why bother making it? “I couldn’t live with the fact that I’m not taking action,” Mickos told News.com.

Mickos’s letter will no doubt be welcomed by Oracle, which has repeatedly said it has only the best intentions for MySQL. “No, we’re not going to spin [MySQL] off,” Oracle CEO Larry Ellison told attendees of a Churchill Club event in Silicon Valley earlier this year. “We are keeping everything. We’re keeping tape. We’re keeping storage. We’re keeping x86 and SPARC. And we’re going to increase investment in all of them.”

AT&V

John Paczkowski — Wed, 07 Oct 2009 18:00:07 +0000

[ See post to watch video ]

AT&V

John Paczkowski — Wed, 07 Oct 2009 18:00:07 +0000

[ See post to watch video ]

Europe, Microsoft to Test "No Browser Left Behind" Scheme

John Paczkowski — Wed, 07 Oct 2009 14:15:13 +0000

Microsoft’s proposed antitrust concessions, particularly its offer to give European computer users a choice of Web browsers, appear to have gone over well with the European Commission. This morning, the EC announced a market test of the browser ballot feature Microsoft plans to include in Windows 7. If it’s successful, the feature will become standard in European versions of Windows and resolve the ongoing antitrust case in which the EC accused the American firm of abusing its Windows monopoly.

“I’m absolutely of the opinion that this is a trustful deal that we’re making. I trust Microsoft,” Competition Commissioner Neelie Kroes said during a press conference this morning. “There can’t be a misunderstanding. Here is the final result of a long discussion over a long period.”

Microsoft (MSFT) was equally upbeat on the EC’s decision. “We welcome today’s announcement by the European Commission to move forward with formal market testing of Microsoft’s proposal relating to web browser choice in Europe,” General Counsel Brad Smith said in a statement. “We also welcome the opportunity to take the next step in the process regarding our proposal to promote interoperability with a broad range of our products.”

There were, however, a few that were not so welcoming of the move. Top among them, ECIS, an industry group whose members include Oracle (ORCL), Sun (JAVA), IBM (IBM) and Nokia (NOK). “ECIS notes that the settlement does not appear to deal with the inadequacies of Microsoft’s standards compliance, unfair pricing practices or other concerns related to patent abuse or standards manipulation,” the group said in a statement.

Europe, Microsoft to Test "No Browser Left Behind" Scheme

John Paczkowski — Wed, 07 Oct 2009 14:15:13 +0000

EC to Intel: How's This for "Manifestly Disproportionate?"

John Paczkowski — Mon, 21 Sep 2009 18:16:49 +0000

Intel’s criticism of the European Commission’s legal acumen clearly has not gone over well in Brussels. The EC today responded to Intel’s claims that the Commission’s antitrust ruling against the company was meted out in error by releasing the full text of its decision and a selection of email correspondence and internal memos that make it clear that Intel (INTC) probably should have kept its big mouth shut.

“There have been some suggestions that the decision was based on allegations and not facts,” said Jonathan Todd, a commission spokesman. “With the publication of this decision, you can see precisely the details of the facts and how Intel broke the law.”

Below, a few of those details:

From a series of 2006 Lenovo e-mails:
“As you know I have been negotiating a special deal with Intel. The net is that Intel has made us a very attractive offer that we will end up taking. Our part of this deal is that we will award all business of shipments for the rest of this calendar year to Intel. In exchange, Intel will give us a special deal for both [geographical area] and [geographical area]. The deal is worth millions of dollars.”

“[two Lenovo executives] had a dinner with [an Intel executive] tonight (…). […] When we asked Intel what level of support we will get on NB [notebook] in next quarter, [he] told us (…) the deal is base[d] [sic] on our assumption to not launch AMD NB [notebook] platform. (…) Intel deal will not allow us to launch AMD.”

From a 2002 HP e-mail concerning the company’s negotiation of a rebate agreement with Intel:
“PLEASE DO NOT… communicate to the regions, your team members or AMD that we are constrained to 5 percent AMD by pursuing the Intel agreement.”

From a 2004 HP e-mail:
“You can NOT use the commercial AMD line in the channel in any country, it must be done direct. “If you do and we get caught (and we will) the Intel moneys (each month) is gone (they would terminate the deal). The risk is too high.”

From a 2004 Dell e-mail:
“[Intel senior executives] are prepared for [all-out war] if Dell joins the AMD exodus. We get ZERO MCP for at least one quarter while Intel ‘investigates the details’ (…) We’ll also have to bite and scratch to even hold 50%, including a commitment to NOT ship in Corporate. If we go in Opti [Optiplex corporate desktop line], they cut it to <20% and use the added MCP to compete against us" and "It looks 100% certain that Intel will take MCP to ZERO for at least one quarter while they 'review all of the numbers and implications.' (...) Appears likely that Intel would take MCP to <25% of current levels UNLESS we agree up front not to ship into [Product line]. If we do that, we're in 'détente' mode and can keep MPC [sic] at 50%. However, we don't meet [AMD Senior Executive]'s T&Cs [Terms and Conditions]. So, I would plan on MCP at <20% levels if we execute AMD across [Product line]and [Product line] as AMD wants."

Sounds pretty damning, no? Well, Intel doesn’t think so. In a hastily issued response, the company dismissed the EC’s release of the documents saying, “there’s nothing new here.”

“This Decision reflects the underlying bias we have come to expect from the case team that ran this investigation,” Intel said. “The Commission relied heavily on speculation found in e-mails from lower level employees that did not participate in the negotiation of the relevant agreements. At the same time, they ignored or minimized hard evidence of what actually happened, including highly authoritative documents, written declarations and testimony given under oath by senior individuals who negotiated the transactions at issue.”