EC investigation of Oracle-Sun enters the endgame

Oracle’s proposed acquisition of Sun Microsystems looks set for approval by the European Commission after the competition commission welcomed commitments from Oracle related to the future development and licensing of the open source MySQL database.

The EC has until January 27, 2010, to reach a final decision however it appears that significant progress has been made following hearings in Brussels last week where Oracle made its case for approving the acquisition and opponents including SAP, Microsoft and Monty Program AB argued against the proposed acquisition.

Oracle has published a list of ten commitments that it is prepared to make to assuage the EC’s concerns over the future of MySQL, which were quickly and enthusiastically welcomed by the European Commission.

Oracle’s commitments

Oracle’s list of ten commitments related to the future licensing and commercial arrangements for MySQL, with a specific focus on the developers of storage engines that plug in to the core MySQL database enabling it to be used for specific application purposes, such as data warehousing, transactional applications, and clustered environments. Oracle stated that the commitments would continue for five years after the completion of the acquisition.

Oracle committed to the ongoing availability of storage engine application programming interfaces (APIs) as well as a promise to change Sun’s current copyright policy to ensure that storage engine providers would not require a commercial license to implement the APIs and would not be required to release their storage engines under the GNU General Public License. Oracle also promised that storage engine providers that currently have an OEM license with Sun to use MySQL alongside proprietary storage engines would be able to extend those agreements on the same terms until December 10, 2014.

With regards to open source licensing, Oracle also committed to continue releasing future versions of the MySQL Community Edition under the GNU GPL, and that new releases of the Community Edition would coincide with new releases of the Enterprise Edition product, for which proprietary licenses and subscription support are available.

Oracle also promised that customers will not be required to purchase support subscriptions from Oracle in order to obtain a proprietary license and that users that do opt to pay for support will have a choice of annual or muti-year support subscriptions

Oracle also repeated its promise to increase research and development spending on MySQL, detailing that in each of the next three years it will spend more that the $24m Sun spent on developing MySQL in its most recent financial year.

The company also stated that it would create two advisory boards – one representing end users and another representing storage engine vendors – to provide guidance on development priorities and other issues. Both will be created within 18 months of the acquisition closing. Finally Oracle committed to maintaining and updating the MySQL Reference Manual at no charge.

Commission’s response

The European competition commission welcomed the commitments, noting that the promises regarding copyright non-assertion and the extension of existing commercial licenses are significant new facts to be taken into consideration.

In the context of the commitments Competition Commissioner Neelie Kroes repeated her previous statement indicating optimism that an agreement could be reached that would allow the acquisition to proceed in a manner that would not have an adverse impact on competition in the European database market.

Last-minute intervention?

Although the commission responded warmly to Oracle’s commitments, the same cannot be said for Oracle’s opponents, especially Monty Program AB, the company set up by MySQL creator Monty Widenius to provide development and support for the MariaDB fork of the MySQL code base. Widenius has initiated a last-minute campaign to highlight user concerns over the future of MySQL, encouraging users to email the commission detailing their their about Oracle’s potential to raise prices and discourage MySQL developments that would enable it to better compete with the Oracle Database.

According to a recent survey of open source users conducted by The 451 Group, 14.4% of current MySQL users are less likely to use the open source database if it is acquired by Oracle, compared to 5.6% who are more likely to use MySQL if it is acquired by Oracle. The majority of users, 63.9%, will continue to use MySQL. That survey, and Widenius’s call to arms, came before the publication of Oracle’s commitments, however.

The 451 take

We did not expect Oracle to offer any concessions that would see it having to divest MySQL. The commitments that Oracle has made appear to strike a balance that protects the current business interests of MySQL storage engine providers and licensees without forcing Oracle to give up any rights to the database product. The EC’s swift and enthusiastic response indicates that the commitments settle many of its concerns about the future of MySQL. Oracle’s acquisition of Sun is not quite a done deal – we suspect there may still be room for negotiation regarding timescales – but it would appear that a major regulatory hurdle has just been lowered significantly. We now expect the proposed acquisition to be approved sooner rather than later. Oracle can be expected to invest in MySQL and position it as an alternative to Microsoft’s SQL Server at the low-end of the database market and for desktop and web applications while continuing to use its Oracle Database product to compete with SQL Server for high end enterprise applications. Do not expect Microsoft to take that competitive threat lying down. Even assuming that the EC’s investigation is near to completion, the controversy surrounding MySQL is likely to be far from over.

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#4 Mike on 12.14.09 at 6:39 pm

The 5-year moratorium on suing ISVs/Customers to assert their copyright is a non-starter. Who will buy a database and go through the implementation knowing that the ISV may have to pull it after 5 years? Or knowing that Oracle could sue the customer directly for infringement after 5 years? It seems to me that this makes tings worse. Oracle acknowledges that there is infringement, but they won’t crack down for 5 years. I would prefer they remain mute on the subject or make it eternal. The 5 year thing will kill the sales process.

#5 Matthew Aslett on 12.15.09 at 4:49 am

Better to have five years to work on a new strategy than none. I agree it is not perfect but it’s certainly an opportunity for negotiation.

#6 Mark Callaghan on 12.15.09 at 9:54 am

The MySQL community needs to organize and we had better do that in less than 5 years. Right now we are in disarray. This was a problem for us in dealing with Sun. It will repeat with the new corporate owner. I don’t imply bad intentions on the part of Sun or others, but they have their goals and we have ours.

#7 Mike on 12.15.09 at 1:31 pm

Matthew, Your comment addresses the vendors’ perspective. Now consider the customer’s perspective: “So, you want me to buy your stuff, invest 2 years and a lot of money getting it running, and then at the end of 5-years, Oracle will sue you and me and possibly put us both out of business?” By stating that there is a problem, it hangs over the head of the prospect like the sword of Damocles. The ISV may very well resolve this within 5 years but they are asking the customer to take a leap of faith.

#8 tecosystems » Oracle, MySQL and the EU: The Endgame Q&A on 12.15.09 at 5:29 pm

[…] has the debate been purely academic; the past two weeks have seen progress sufficient for some to declare that the transaction’s endgame is – mercifully – at […]