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Nov. 27, 2009

Oracle's controversial and largely talked about acquisition of Sun Microsystems has now reached new heights.

It is now reported that Sun is bleeding cash at a very alarming rate. Sun's troubles have now found their way to Congress, where a majority of the U.S. Senate has entered the controversy.

The latest developments in the Sun soap opera come as the result of recent actions by European antitrust regulators. The last few weeks have brought a "Statement of Objections" from EU regulators, taking issue with various aspects of the proposed acquisition.

Of the highest importance is the issue of industry competition in the global database market, as Sun acquired MySQL in late 2007. Industry observers have long suggested that these concerns were misplaced. But given the differences between Oracle and MySQL products, as well as the Open Source nature of MySQL, others disagree.

That the latter has little in the way of European market share has likewise been noted as well...

Despite having issued it's formal objections to the planned acquisition, the European Commission continues to investigate the matter, and according to Oracle officials, it's costing Sun some $100 million in cash per month.

Sun Microsystems is a fairly large employer, but now worries have grown that layoffs and possibly worse may be on the near horizon, leading U.S. Congressmen to step into the matter.

Following the lead of high-profile senators Orrin Hatch and John Kerry, some fifty-nine members of the Untied States Senate (more than 50 percent) have now joined in sending a letter to the European Commission, asking that it completes its investigation ASAP.

Citing the threat to American jobs, Senator Kerry told reporters that the senators "felt compelled to ask for a speedy resolution" to the saga that began in February of this year.

Compounding matters even more, the European Commission's investigation falls into a somewhat unique legal arena. Though reports often describe it as blocking such acquisitions, it lacks the authority to prevent the deal in the first place.

As Oracle and Sun are both U.S. corporations, they fall under the exclusive purview of the U.S. Department of Justice, and may continue with the takeover regardless of the EU Commission's decision anyway.

That isn't to suggest that the EC is powerless. But although it can't directly block the acquisition, it can certainly prevent the companies from doing business within the European Union, and that is what this is all about.

Many industry observers say that such a move would be extreme, as it would significantly unbalance competition in the European database market and the open source community, likely creating a far worse situation than permitting the acquisition would have.

Additionally, it would leave Oracle and MySQL customers in Europe in the cold, a situation which would no doubt land itself squarely in the laps of European legislators besieged by some very angry constituents.

Ever seeing a situation of this nature is probably unlikely, as cooler heads and diplomatic resolution inevitably prevails, but the whole saga still has many in the open source community worried of the long-term impacts such a move could have on the IT industry.

Exactly what effect the senator's move could have on the situation is greatly a matter of open speculation, though such a dramatic show by more than half of Congress' upper house is unlikely to be lost on European officials.

There's no doubt anymore that this whole debate has now taken new proportions, and there are now many industry observers that are watching these developments unfold very carefully.

We will keep you posted.

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Source: EULN.

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