Oracle Threatens “War” Against EC Regulators

I wrote earlier today that push was coming to shove in the standoff between the European Commission (EC) and Oracle regarding the former’s in-depth review of the latter’s pending $7.4-billion acquisition of Sun Microsystems.

Perhaps I understated matters.

If a report by Paul Meller of IDG News Service is accurate, Oracle is preparing to take the battle to the hockey rink, with the gloves coming off and the jerseys of EC regulators getting pulled over their heads in the ensuing melee.

Anticipating a statement of objection from the EC this week. Oracle is planning to mount an aggressive onslaught against the European regulatory body.

Said an anonymous source, “familiar with Oracle’s thinking”:

“The ball game would change dramatically if the Commission issues a statement of objections.

Oracle has been holding back until now, and contrary to what the Commission says, it has addressed the substance of the Commission’s concerns about the deal in huge abundance.”

Holding back? Oracle? That alone sounds farfetched, but I’ll let it pass.

Of course, the sticking point remains MySQL and the competitiveness of the database market. The EC contends that Oracle hasn’t satisfied concerns regarding how Oracle’s ownership of MySQL would affect competition in the database market. Oracle, if the anonymous source quoted by Meller is correct, believes it has addressed the EC’s concerns.

Meller’s source also confirms what has been written here before: that Oracle sees MySQL as “a strategic imperative of the deal.” Oracle wishes to use MySQL as its competitive entry against Microsoft in SMB accounts and in developing markets, such as China, India, Eastern Europe, and Latin America. For Oracle, owning MySQL is all about beating Microsoft in fast-growing database markets where its existing products give prospective customers sticker shock.

Another anonymous source, “close to the merging companies,” suggested that the merger file was handled in the summer months by “B-team” European regulators while the frontline roster of EC competition bureaucrats was enjoying lengthy seasonal vacations. I suppose it’s never too early to exploit the anti-European stereotype of indolent Old World grandees spending the summer under sun umbrellas on Mediterranean beaches.

One of the anonymous sources in Meller’s story said an EC formal objection to the Oracle-Sun merger will trigger transatlantic “war,” with American politicians, such as Speaker of the House Nancy Pelosi, ready to intercede on Sun’s behalf. It would be similar to the U.S. government’s reaction to the last major deal blocked by the EC, involving GE’s bid to acquire Honeywell in 2001, according to the source.

What we’re seeing now are preemptive hardball tactics from Oracle. It’s trying to intimidate the EC into backing down, into letting the deal go through unmolested. The intimidation might work, with Oracle’s saber rattling persuading the EC not to spark a transatlantic row by further obstructing or denying the acquisition.

Then again, the tough-guy tactics could backfire. EU Competition Commissioner Neelie Kroes doesn’t seem a shrinking violet. On this rink, on European soil, she just might be willing to drop the gloves with Larry and Safra.


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