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Global CIO: Oracle Nailed By EU Protectionism As HP And IBM Raid SunGlobal CIO: Oracle Nailed By EU Protectionism As HP And IBM Raid Sun
The European Commission says it's investigating Oracle's acquisition of Sun to protect consumers. That's nonsense--they're doing it for one and only one reason: because they can.
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But it's also worth noting that this whole sorry case is about more—much, much more—than the anti-capitalist efforts of some Brussels busy-bodies attempting to comprehend and interact with the business world. Whether you love Oracle or hate it, it's pretty grim to see the real-world damage that all this EC nonsense is inflicting on Oracle, which in its effort to acquire Sun has done everything the law requires and everything that Sun executives, board members, and shareholders demanded. Imagine that the company being abused as a protectionist pawn was not Oracle but instead your own company—you know, the one whose stock price will largely determine when or if you can retire?
From a Wall Street Journal article late last week:
IBM, H-P and Dell "just feed off of" the uncertainty, says James Staten, an analyst at Forrester Research. "This is a golden opportunity that they won't get back and they're trying to get as many people switched as they can before Oracle closes the deal." On Thursday, those rivals' poaching efforts appeared to be strengthened when the European Commission said it would delay the closing of the Sun-Oracle deal as it launches a probe into the acquisition. (Emphasis added.)
. . . . The success of the rivals' poaching efforts is showing up in Sun's deteriorating revenue and market share (emphasis added). In the second quarter, Sun's revenue from server sales fell 37% from a year earlier, steeper than the 30% decline for the overall industry, according to research firm IDC. Sun's server market share dropped from 11% a year earlier to 10%, even as Dell and IBM saw market shares rise.
And then there's this trenchant analysis from Europe's own Financial Times, which noted that the centerpiece of Kroes' argument, which is MySQL, accounted for all of $24 million in European revenue last year:
The longer European review, which could extend into early next year, would add greatly to the uncertainty surrounding the struggling Sun and further undermine confidence among its customers, analysts warned.
"It's going to be very damaging to Sun and its whole market," said Andy Butler, an analyst at Gartner, a tech research firm. "It's slowly haemorrhaging their business viability (emphasis added). The only winners today are companies like Microsoft, IBM and Hewlett-Packard."
The controversy surrounding the regulatory delay was heightened yesterday by the nature of the potential European concerns, which touch on an area of the technology world that accounts only for a very small fraction of Sun's business (emphasis added).
This is rotten and it stinks, just as protectionism is always rotten and stinks. I might have been willing to scrape up an ounce of respect for the EC had they just been honest and said, "We're going to let this big, successful, profitable, and aggressive American company twist in the wind for a while to make sure they know just what we can do to them any time we want." But I suppose it's asking far too much to expect honesty from a bunch whose sole mission is to stifle vigorous free-market capitalism.
So even for you Oracle-haters out there, please don't take too much joy out of this travesty, because if the EC is able to string Oracle along for three or four months on such disgracefully groundless claims, the busybodies will be further emboldened the next time plans for a merger are tossed into their playpen. And in that case, the company they choose to screw—because they can—just might be yours.
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