Open Source for Small Business

Open Source Journal

The European Commission Tuesday responded in kind to Oracle’s contention that its decision to potentially block Oracle’s $7.4 billion acquisition of Sun because of MySQL – whose revenues are barely a rounding error in Oracle’s books – shows “a profound misunderstanding of both database competition and open source dynamics."

The EC dismissed Oracle’s argument that “MySQL is open source, it cannot be controlled by anyone. That is the whole point of open source” as “facile and superficial.”

According to EC spokesman Jonathan Todd, the EC is concerned that Oracle could pull the plug on commercial licenses and raise prices.

“Despite MySQL being open source, Oracle would be the exclusive holder of copyright on the MySQL code, making it hard for competitors to do what they want with it,” he said.

Oracle said Monday when the EC issued a formal statement of objections that “given the lack of any credible theory or evidence of competitive harm, we are confident we will ultimately obtain unconditional clearance of the transaction.”

A hearing has reportedly been set for November 25, the day before Thanksgiving, in Brussels for Oracle to argue its position ahead of a final EC decision by January 19.

Of course, that position is going to the same unpersuasive argument it used in private negotiations a few weeks ago with the EC.

The EC apparently wants Sun’s billion-dollar MySQL acquisition spun off as a competitive foil to proprietary databases.

Oracle can only repeat its contention that “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.”

Todd made note of how “unusual” it was for the Justice Department to comment on an EC decision. He said, “I cannot recall any instance where the European Commission has ever issued a statement concerning ongoing investigations in another jurisdiction.”

The DOJ said Monday that “the merger is unlikely to be anticompetitive” and that it had found 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.”

Todd said, “We apply European merger controls rules, they apply US merger control rules,” suggesting that the EC saw different evidence.

The only other time the DOJ and the EC were divided over the merger of two US companies was in 2000-2001 when the EC – which leans more to protecting competitors than competition and was clearly egged on in the GE case by Honeywell’s jilted American suitor United Technologies et al – stopped GE from acquiring Honeywell for $43 billion over the objections of the Bush White House. It created a big brouhaha and bad blood between the regulators.

Although the merger couldn’t be saved, GE took the decision to the Court of First Instance (CFI) anyway to clarify what those rules are and dispel the idea that it had a dominant position so it wouldn’t have trouble in the future.

A ruling finally came down very late in 2005 upholding the EC’s decision in part. But it found that the EC’s grounds were largely wrong and its conclusions about the anticompetitive effects of the merger mere goblins under the EC’s bed.

According to a Dow Jones analysis from back then, the CFI decision basically said that “the EU needs strong economic justification to nix big international deals.”

According to Gartner MySQL last year represented 0.04% of the $4.8 billion EMEA RDBM market.

Ironically the only board Sun chairman Scott McNealy even sat on other than his own was GE’s. No doubt somewhere in the background ex-GE CEO Jack Welsh, the guy who postponed his retirement to oversee the integration of GE and Honeywell, is playing coach.