RealTime IT News

States' Case Vs. Oracle Draws Cheers, Jeers

Apparently there are no fence-sitters when it comes to Oracle's $9.4 billion proposal to acquire PeopleSoft.

The Attorneys General of Connecticut and Ohio filed a motion in federal District Court in San Francisco late Wednesday to intervene in the antitrust suit brought forward by the U.S. Justice Department.

The government is seeking to block the unsolicited bid that it claims reduces the number of firms offering a full array of enterprise resource planning (ERP) tools down to two. Currently, German-owned SAP leads the pack with Oracle and PeopleSoft trailing.

Connecticut and Ohio now join eight other states including Michigan, which also filed paperwork Wednesday to stand underneath the umbrella of the DoJ's case. Connecticut had filed its own suit in state court when the original deal was announced in June 2003. This is the first time Ohio has entered into the argument.

The states claim the Oracle takeover threatens loss or damage to the business or property, as well as the general welfare and economies, of each state. According to Connecticut Comptroller Nancy Wyman, a takeover would create an "enormous and expensive upheaval" of the state's ongoing conversion of its computer system, known as Core-CT.

The $100 million conversion is based on software purchased from PeopleSoft under a five-year contract signed in 2002. A spokesperson for Ohio State Attorney General Jim Petro did not disclose what kind of financial damages could be incurred as a result of the takeover. But Michigan Attorney General Mike Cox said his state's taxpayers could be looking at more than $130 million in damages were the merger to succeed.

Oracle's has staunchly maintained that its ERP defense identifies the software vendor as a competitor in the broader software market facing stiff competition in the mid-tier sector from Microsoft, IBM and others.

An Oracle spokesperson was not immediately available for comment on the addition of Michigan, Connecticut or Ohio, but court documents show that the Redwood Shores, Calif.-based company "does not oppose this motion."

On the opposite side of the argument sits the silent majority who are in favor of Oracle's acquisition plans, according to the Association for Competitive Technology. The advocacy group represents nearly 3000 software developers, systems integrators, IT consulting and training firms, and e-businesses companies.

ACT President Jonathan Zuck told internetnews.com that his organization is considering filing some amicus briefs in favor of the merger.

"We're still in the planning stages of how we're going to respond," Zuck said. "We may be looking to find others in participating in the process, but we don't know. It's not on everybody's radar."

One issue Zuck said he has is that the DoJ and for that matter many of the 10 states are hypocritical when it comes to putting Oracle into any particular category.

"The lawsuit Michigan chose to join today is predicated on a single fact: Oracle, SAP and PeopleSoft are the only companies in the world providing accounting and human resources software to large companies and government agencies. Yet, the state of Michigan itself uses software from a completely different company than the 'only three options' named in the lawsuit," Zuck said in a statement.

He also pointed out that the DoJ awarded a massive $24 million contract for its own accounting software to a company other than 'the only three that exist' in its legal case. Zuck called on both the DoJ and Michigan to immediately withdraw from the case to avoid further embarrassment.

The trial is scheduled to begin on June 7 in U.S. District Court in San Francisco. Judge Vaughn R. Walker is expected to hear pre-trial arguments April 16 on whether the states' case will continue to piggyback on the Justice Department's case.