EC Puts the Brakes on Oracle’s Sun Acquisition

The news on Thursday that European Union antitrust regulators have launched an
in-depth probe into Oracle’s $7.4 billion takeover of Sun Microsystems on competitive
concerns was the worst outcome for the two firms as they are both left paralyzed for an
indeterminate length of time.

The European Commission, the competition watchdog of the European Union, set a January
19, 2010 deadline for its decision, putting Oracle months behind its original plan for
closing the deal.

In the meantime, Oracle has an action plan for Sun that it cannot put into motion, and
Sun has no effective leadership to help defend its continued losses and
defections of customers.

HP and especially IBM have been offering discounts and other incentives to steal away
Sun customers since Oracle agreed to buy Sun in April. Between that, concerns about
Oracle as the owner of Sun, and rumors Oracle would turn around and sell Sun’s hardware
business, IBM and HP have not had to make a particularly hard sell.

“It certainly kills the value of it,” James Staten, senior analyst with Forrester, told InternetNews.com. “You just know
that IBM, HP and Dell are frothing at the mouth. They’ve already stolen a significant
chunk of their sales before the delay, now with this delay they are just going to go hog
wild.”

Sun declined to comment, while Oracle only issued a statement acknowledging the EC
investigation.

All because of MySQL

Sun walked
away
from a possible merger with IBM in April because it feared a protracted
antitrust investigation by the U.S. Department of Justice, since the two firms were both
in the hardware business. The DoJ signed off on the Oracle/Sun deal on August 20.

Now, the problem all stems from MySQL, an open source database worth about $300
million to Sun. For a giant like Oracle, that’s a small amount, but that’s what the EC is
focused on in its investigation. Read the rest at InternetNews.com.

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