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EU Approves Sun Acquisition by Oracle Oracle to Present its Sun Strategy on Jan. 27 January 21, 2010, Volume 143, Issue 3
The European Commission has issued regulatory approval for Oracle's acquisition of Sun Microsystems, Inc. for $7.4 billion. Oracle announced the news Jan. 21, and revealed it also expects unconditional approval from China and Russia. The company intends to close the transaction shortly. With Sun being a top player in the $17 billion high-end computer-server market, this acquisition will reshape the high-tech landscape, Reuters reports. Oracle is the world's No. 2 business software maker, and will now be moving into the hardware business. The European Commission had launched an in-depth investigation of the deal, which began in April 2009, specifically with an eye on anti-competitive issues regarding Sun's MySQL database. According to a Europa report, results from the Commission's 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. Additionally, the Commission 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. Europa states that the Commission's investigation showed 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. 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 the future to exercise a competitive constraint on Oracle in a sufficient and timely manner. Another consideration observed by the Commission was Oracle's promise this past December to keep the market open for others to make storage engine software for MySQL and to boost investment in the solution. Oracle also pledged to set up a separate customer advisory board of MySQL users. The Commission said its decision took into account Oracle's public pledges and noted that the company had already implemented some of its promises. These concessions satisfied the European Commission that the deal will not adversely affect the market. 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 jeopardize 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. "I am now satisfied that competition and innovation will be preserved on all the markets concerned," EU 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." Oracle CEO Larry Ellison has scheduled a live event set to take place Jan. 27, from 9:00 AM - 2:00 PM PT to lay out his plans for combining the two companies and their products. Ellison, along with executives from Oracle and Sun, will outline the strategy for the combined companies, product roadmaps, and how customers will benefit from having all components - hardware, operating system, database, middleware, and applications - engineered to work together. The event will be broadcast globally, and registration for the event is currently underway. Bloomberg News also reports that Oracle isn't planning on firing half the Sun work force after it completes the acquisition of the company as reported by UBS stock analyst Brent Thill. Brian Sutphin, executive vice president of corporate development and alliances at Sun, said in a memo to company employees, "Oracle has asked me to assure Sun employees that this report is absolutely untrue. It is regrettable that an analyst can be so irresponsible without any facts. Oracle is acquiring Sun to do something it cannot do alone--deliver complete, integrated systems. Oracle will need to rely heavily on the talents of Sun employees to achieve this vision." More Information
Oracle + Sun Strategy Update Webcast - Jan. 27th event
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Oracle's acquisition of Sun has the potential to revitalize important assets and create new and innovative products 
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EU Approves Sun Acquisition by Oracle
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