DoJ to Oracle/Sun: Not So Fast, Pardners
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The federal government has denied Oracle's request for a speedy approval of its $7.4 billion purchase of Sun Microsystems, requesting more time to give the purchase scrutiny before passing it on to the Federal Trade Commission and the Securities and Exchange Commission for approval.
The DoJ's decision means it will take another 30 to 60 days to perform due diligence on the proposed merger, announced in April after talks between IBM and Sun (NASDAQ: JAVA) collapsed.
A deadline for the DoJ to approve the deal and send it up to the FTC and SEC for their stamp of approval was June 26. While those two agencies would approach the merger from a securities and shareholder standpoint, the DoJ would look at things from a legal (read: antitrust) standpoint.
A spokesperson for Sun declined to comment. Sun shareholders meet on July 16 to vote on the merger.
Oracle (NASDAQ: ORCL) issued a brief statement late on Friday via its legal counsel Dan Wall of the firm Latham & Watkins:
"We've had a very good dialogue with the Department of Justice and we were almost able to resolve everything before the Second Request deadline. All that's left is one narrow issue about the way rights to Java are licensed that is never going to get in the way of the deal. I fully expect that the investigation will end soon and not delay the closing of the deal this summer."
The future of Java
Gartner Vice President and Research Fellow Martin Reynolds isn't surprised at this concern. "You can figure there are a few organizations that are concerned with Oracle having too much control over Java," he said.
The big threat is that Oracle might take Java and make the language its own, leaving other firms heavily invested in the language behind. While such a move would almost certainly engender ill will, CEO Larry Ellison has never been overly concerned with winning a popularity contest.
"If Oracle were to move Java in such a way it was difficult to use, Oracle wouldn't feel that bad about it," said Reynolds. "What they care about are business suite customers. Oracle doesn't see itself as a purveyor of Java tools. It sees itself as a purveyor of tools to run your business."
In the end, though, Reynolds doesn't think that will happen. "The likely outcome is [the DoJ] says 'we don't see any problems but we'd like to see this, this and this, so they might put Oracle through some commitments about the openness of Java," he said.
Ironically, the DoJ doesn't seem interested in the database overlap that would result from the merger. Sun's open source MySQL database isn't a direct competitor to Oracle's family of enterprise databases, but it does increase the hegemony. MySQL notes that industry stats show that together, Oracle and MySQL would account for a huge share of the database market.