Oracle-Sun deal hits a European snag
TEXT OF INTERVIEW
The European Commission has delivered some bad news to software giant Oracle. The EC has objected to Oracle’s proposed deal to buy Sun Microsystems on antitrust grounds. For its part, Oracle says it will, in its words, “vigorously oppose” the Commission’s objections, which has thrown the $7 billion deal into question. Kevin Allison is Lex columnist for the Financial Times paper in London. Good morning.
Kevin Allison: Hi, good morning.
Chiotakis: Why the discrepancy between the United States’ Justice Department giving this deal the go-ahead, and the European Commission
Allison: It is strange because Christine Varney, who is President Obama’s choice as the U.S. Justice Department’s antitrust chief, has pledged to reassert the government’s role in policing anti-competitive behavior after what some people considered was a laissez-faire series of years under the Bush administration. Theoretically, that should jive well with the European Commission, which has always been more activist about policing competition concerns. But in this case, it’s the European Commission which is at loggerheads with the U.S. Justice Department about whether or not the Sun Microsystems deal should be allowed to proceed.
Chiotakis: So how does this move forward? What’s the likelihood that the deal goes forward with this objection?
Allison: Well, previously both Oracle and the EU antitrust authorities have said that it’s a relatively minor problem that should be able to be fixed quickly. But that’s sort of at odds with Oracle’s rather strident objection to the Brussel’s objection. Now, Oracle could walk away, but it probably doesn’t want to because that would mean that some of Sun’s more valuable software, such as Java and Solaris, might fall into the hands of Oracle’s competitors. So Oracle still has an incentive to get the deal done. It just has been unusually vocal about its objections to Brussel’s ruling.
Chiotakis: Kevin, how does this affect someone who’s going to buy a computer today?
Allison: Well for your average laptop owner or your average person who’s listening to their iPod, tapping away on their Mac, is probably not going to have too much to worry about from whether or not an Oracle-Sun deal goes through. But it’s actually very important because this software helps companies lower costs and improve the way they can serve customers. A company like Amazon, for example, has to manage immense amounts of data that it gets from customers about purchases that they’re making online. It’s a massive amount of data, and those companies that are going to have to face some of the competitive issues that could arise from Oracle buying Sun.
Chiotakis: All right. Kevin Allison, the Financial Times’ Lex columnist. We thank you for joining us today.
Allison: Thank you.
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