EU Commission objects to Oracle's purchase of Sun

THE EUROPEAN COMMISSION (EC) has formally objected to Oracle's acquisition of Sun, due to the purchase including the open source database system MySQL.

According to a Sun filing with the US Securities and Exchange Commission, the EC has issued a statement of objections, which focuses on Oracle's acquisition of MySQL as opposed to Sun's other assets, and reads:

"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".

Oracle immediately responded with a statement:

"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."

Oracle's statement continues with a note of strong disagreement with the EC:

"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."

It concludes with Oracle's determination to oppose the EC's objections:

"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."

Meanwhile Florian Mueller who is in agreement with MySQL founder Michael 'Monty' Widenius, as previously reported by the Inquirer, sent us his comment regarding the EC's objection, stating:

"Oracle wants it all, Sun stands to lose it all and the European Commission apparently had no other choice but to issue this Statement of Objections because Oracle just doesn't want to understand. Those who claim that MySQL's open source nature all by itself ensures competition ignore the fact that open source is just a distribution vehicle while MySQL depends on a company using the related intellectual property rights to generate revenues and fund further development. Why would Sun have paid $1 billion for something that can be forked? Why doesn't Oracle just close the Sun deal quickly without MySQL and fork it if it's all that easy to do and it doesn't matter who owns the assets?"

Meanwhile, Sun is reportedly losing $100 million per month, according to Oracle CEO Larry Ellison, as customers hold off on purchases or defect to competitors, primarily IBM and HP.

However it seems that Florian and Monty and friends, for the time being at least, have got their way. µ