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EC Clears Oracle’s Acquisition of Sun

It’s been blocking the deal since September because Sun owns the popular open source database MySQL

Oracle Keynote at Cloud Expo

Cloud Computing Expo - The European Commission this morning waved Oracle's $7.4 billion acquisition of Sun Microsystems through without any strings attached.

It's been blocking the deal since September because Sun owns the popular open source database MySQL, one of the legs of the fabled LAMP stack, and was certain Oracle would roll over and crush it.

In the end it said it decided the transaction "would not significantly impede effective competition."

MySQL creator Monty Widenius, who has been lobbying the regulators to force Oracle to divest MySQL, is threatening to appeal the EC's decision.

He is also hoping regulators in China and Russia will block the acquisition.

Oracle doesn't seem too worried that will happen. It said this morning that it "expects unconditional approval from China and Russia and intends to close the transaction shortly."

It has also scheduled a five-hour event next Wednesday, the same day Apple is supposed to unveil a tablet, to "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."

Widenius has two months to appeal. However, even his spokesman Florian Mueller admits that if he won "then the merger would, theoretically, have to be undone, at least as far as MySQL is concerned, but no one has ever figured out how that would practically be done."

In its statement this morning the EC indicated that Oracle's ability to revitalize Sun contributed to its decision. It jettisoned its dearly held position that Oracle and MySQL compete across-the-board and instead found that while they "compete in certain parts of the database market they are not close competitors in others, such as the high-end segment."

It also found that MySQL as competitive speed bump to Oracle could be replaced by PostgreSQL, another open source database, which it called "a credible alternative to MySQL," or failing that by MySQL forks.

The regulator acknowledged that the MySQL pledges Oracle made last month to give the EC a cover story for its volte-face such as its promise to make future versions of the database available under the GPL played a role and apparently it didn't hurt that "Oracle has already taken action to implement some of its pledges by making binding offers to third parties who currently have a licensing contract for MySQL with Sun to amend contracts. This is likely to allow third parties to continue to develop storage engines to be integrated with MySQL and to extend the functionality of MySQL."

In response Mueller said, the "EC can't seriously claim that PostgreSQL could replace MySQL as a competitive force. Forks (derived works based on an existing open source project) are a legal possibility but there's no reason to assume that any MySQL fork, or even a number of such forks collectively, could threaten Oracle to the extent that MySQL could. And finally, Oracle's promises are not legally binding per se and even if they were, they wouldn't have any noteworthy pro-competitive effect. I can't think of a single bad thing, short of discontinuing the product immediately, that Oracle couldn't do while still complying fully with those promises in a legal sense.

"So I believe the EC's decision is the wrong one, it's not based on hard facts that would have come up after the EC issued its Statement of Objections, it may not be upheld in the event of an appeal and it should not serve as the basis for decisions taken by other regulators because it would set an awful precedent for merger control in connection with open source and a variety of other IT business models."

The Commission, which never acknowledged publicly that the fate of Java concerned it at all, also said 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)" and 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."

It also gave it a pass on middleware.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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