The sun has not yet set on this debate

By Dave Bailey
05 Nov 2009 View Comments
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Dave Bailey

Anybody who sat through the 86-minute YouTube video of Sun Microsystems’ former president, Ed Zander, grilling Oracle chief executive Larry Ellison at the Churchill Club in Silicon Valley, will be under no illusions that Oracle does not want to spin off the open-source database MySQL if its acquisition of Sun goes ahead.

Zander asks: “If [the European Union] asked you to spin it off, would you?”
“No,” answers Ellison.

“If they told you to spin it off, would you?” adds Zander.

“No. We’re not going to spin it off,” states Ellison categorically.

Look at the determination on Ellison’s face at 33 minutes 17 seconds into the video ­ he’s deadly serious, although he was careful not to put the boot into the EU competition team that is running a fine-tooth comb over the Sun deal.

The EU investigation, according to Ellison, is costing struggling Sun $100m (£61m) a month, and with the deadline for the EU’s musings set for January 2010, it could result in half a billion dollars of Sun’s cash disappearing down the drain.

Of course, there is steam coming out of Oracle’s ears at a non-US body having the temerity to put the boot into its plans for world domination. But given the size of the European market, lip-biting for acquisitive vendors is turning into a fine art.

As one of the big four IT vendors, and the biggest in database technology, why would Oracle take over Sun and then decide to spin off MySQL? Because, make no mistake, even though in the YouTube clip Ellison said Oracle and MySQL never compete, MySQL was always a threat to Oracle.

Why? Well, check out the last statistics from the Department for Business, Innovation and Skills, which shows that small businesses contribute more than half the overall turnover, and nearly 60 per cent of the employees, of UK companies. I don’t know the equivalent statistics for the US, but the reason Oracle wants to hold onto MySQL is right there.

MySQL is normally deployed by smaller firms. If Oracle owns MySQL, when growing companies move into the large enterprise category through expansion, what better way to increase Oracle use than to offer an upgrade from MySQL?

And there is another reason. Imagine the people at MySQL saying one day: “We have a lot of market share among small businesses. Why don’t we put in some big tweaks and see if we can expand into the large enterprise market?”

Given the expertise of the open-source community, such tweaks would not be that difficult to develop, and that would make MySQL a threat not just to Oracle but to other vendors of top-end database systems. That would make a lot more competition in the market and could even lead to competing vendors reducing their prices.

So what will the EU regulators decide? If Oracle gets its tentacles around MySQL, which is probably the premier open-source database, it could reduce competition in the technology market. That is what the EU regulators want to avoid, and why they have previously applied hefty fines to US giants such as Intel and Microsoft for anti-competitive behaviour.

I suspect the EU will try to force the issue and approve the acquisition, but on the condition that Oracle spins off MySQL. Ellison would not take such a decision lightly, so expect more fireworks to come.

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