It's the US vs. the EU over Oracle+Sun and the meaning of 'open source'
Late yesterday, Sun Microsystems gave the first public notice to the US Securities and Exchange Commission that Oracle Corp., its prospective suitor, had received a Statement of Objections from the European Commission with regard to Oracle's plan to acquire Sun. Not only had 62% of Sun shareholders already cleared the deal last May, but the US Justice Dept. cleared the deal last August.
At issue was the fate of MySQL, the open source database product that Sun acquired in January 2008. In Sun's one-paragraph 8-K filing, it mentioned the EC's sole focus: "The Statement of Objections sets out the Commission's preliminary assessment regarding, and is limited to, the combination of Sun's open source MySQL database product with Oracle's enterprise database products and its potential negative effects on competition in the market for database products."
Though the EC had not yet issued its own official statement on the Objection, as is its usual course with private communications, once Oracle issued its own public statement confirming receipt of the letter, the US Justice Dept. took an unusual stand of its own. Late yesterday, Deputy Assistant Attorney General Molly Boast weighed in with the US' official opinion that Oracle would continue to produce MySQL in addition to its own commercial RDBMS, going so far as to hypothesize that if Oracle changed MySQL, the open source community would change with it.
"There are many open-source and proprietary database competitors. The Division concluded, based on the specific facts at issue in the transaction, that consumer harm is unlikely because customers would continue to have choices from a variety of well established and widely accepted database products," reads DAAG Boast's statement last night. "The Department also concluded that there is a large community of developers and users of Sun's open source database with significant expertise in maintaining and improving the software, and who could support a derivative version of it."
Boast appeared to echo Oracle's response earlier in the day, which was quite strong but not at all uncharacteristic of Oracle: "The transaction does not threaten to reduce competition in the slightest, including in the database market. The Commission's Statement of Objections reveals a profound misunderstanding of both database competition and open source dynamics. It is well understood by those knowledgeable about open source software that because MySQL is open source, it cannot be controlled by anyone. That is the whole point of open source.
"The database market is intensely competitive with at least eight strong players, including IBM, Microsoft, Sybase and three distinct open source vendors," Oracle's statement continued. "Oracle and MySQL are very different database products. There is no basis in European law for objecting to a merger of two among eight firms selling differentiated products. Mergers like this occur regularly and have not been prohibited by United States or European regulators in decades."
The double-whammy response -- colored red, white, and blue, but mainly red for Oracle -- triggered an unprecedented comment from EC spokesperson Jonathan Todd, who with regard to previous Statements such as to Intel and Microsoft, withheld comment until a later time. In a comment to Dow Jones this morning, Todd dismissed Oracle's statement as "superficial," but then went straight to the heart of the Justice Dept.'s complaint, suggesting that the DOJ didn't really investigate the conditions of the merger.
"We don't always have the same evidence in front of us," Todd told Dow Jones. He went on to suggest that if Oracle acquires the copyright to MySQL, Oracle could then exert its influence in deciding which developers had the right to make use of it -- meaning it would no longer truly be open source.
It is true that, while the US Justice Dept. has not demonstrated any particular duty to protect "open source" as an entity unto itself, the European Commission has. While the US' assessment of this and other cases tends to evaluate the past, present, and prospective future positions of companies in the market, the EC often portrays open source as a competitor deserving of certain guarantees.
To that end, Todd added to Dow Jones that he felt it unusual for the DOJ to comment with regard to what he considered a matter of European jurisdiction. Oracle is headquartered in Redwood Shores, California, and Sun Microsystems in Santa Clara. MySQL was founded in Sweden, though its official headquarters as a Sun subsidiary is now in Cupertino.
The public face of MySQL, vice president Kaj Arno, has withheld direct comment on the whole affair, although last July he posted links to comments from his colleagues suggesting a positive outcome. Since that time, however, one of those colleagues -- MySQL co-creator Michael "Monty" Widenius -- posted his objection to the deal last month, unless Oracle were willing to offload MySQL to a third party, "enabling an instant solution instead of letting Sun suffer much longer," as Widenius put it.
Recently, Widenius followed up that post with what was effectively a how-to guide for killing MySQL off. "The easiest way to kill MySQL would be to not sell licenses any more or make their prices 'really high,'" he began.
Then he advanced a theory which effectively counters the position of the Justice Dept.: "The simple fact is that keeping a project like MySQL alive and having it compete with big vendors like Oracle, require many people working in it. If they can't get any revenue from doing that (except support revenue, which is not enough), you will find very few companies prepared to do development, and extremely few (or none) investment companies would put serious money on a company that gets all of its money on services (not scalable)."