Oracle’s Sun Deal Snagged in Brussels

Summary

Across the tech industry firms that used to have business alliances are now in competition and the courts are starting to step in. With the Oracle and Sun deal, it's interesting that in the U.S. the hurdle was Java, a main reason for the Sun acquisition and a product that many Oracle rivals use. In Brussels, the issue is MySQL and Oracle's the database software business and the fear that Oracle has little incentive to continue developing a product that could be disruptive to its core business.

Analysis

The tech industry is facing many hurdles as companies that used to have business alliances together are now competing in various parts of their business. And, as companies look to acquire other companies, the courts are starting to hold up the process as they hold off on their approval.

In the case of the Oracle and Sun deal, it's interesting that in the U.S. the hurdle was Java, the programming language and software development tools that are controlled by Sun and which Oracle has singled out as the main reason for its acquisition and a big issue was the fact that Oracle's rival IBM is a big user of Java.

In Brussels, the issue seems to be around MySQL and Oracle's the database software business because some Oracle rivals claim that the software maker would have little incentive to continue developing a product that could one day prove disruptive to Oracle's core business.

While all this is going on, Oracle is making inroads into the hardware business which is an area they traditionally haven't been in before. While the proposed $7.4 billion takeover of Sun Microsystems is uncertain amid antitrust scrutiny, Oracle Corp. is moving ahead with a new database machine incorporating both Oracle and Sun technology, and is no longer making database machines with Hewlett-Packard. (The earlier version of the machine was built by Oracle and Hewlett-Packard Co. and when it was introduced last year marked the first time in Oracle's history that the company sold computer hardware.)

Are the courts right to step in? Maybe and maybe not. I'd argue that you should let it all shake out in the industry and that some competition is good. Acquisitions are hard to implement as company cultures collide and channels to market need to be retrained. I find it most interesting that different courts are getting hung up on different parts of the business.