EU deepens its probe into Oracle-Sun deal

The European Commission has launched an in-depth investigation into Oracle's planned £4.5bn purchase of Sun.

The inquiry will examine the effect of the deal on competition in the European database market, European regulators said in a statement on Thursday. The commission pointed out that Oracle's proprietary database products go up directly against MySQL open-source software, which is overseen by Sun.

EU competition commissioner Neelie Kroes said that European authorities had an obligation to make sure that the acquisition would not lead to reduced customer choice or higher prices.

"The Commission has to examine very carefully the effects on competition in Europe when the world's leading proprietary database company proposes to take over the world's leading open-source database company," Kroes said in the statement.

The Commisssion is expected to make its final decision on whether the purchase will be given the go-ahead by 19 January, 2010. That constitutes a further delay to the acquisition, which was announced by Oracle on 20 April. The deal was approved by US authorities on 20 August.

One area of concern mentioned by the European regulators is MySQL. Sun acquired the company behind the open-source database in January 2008 for $1bn (£600m).

"In its in-depth investigation, the Commission will… address a number of issues, including Oracle's incentive to further develop MySQL as an open-source database," the Commission said.

The European regulators said that Oracle, IBM and Microsoft control around 85 percent of the database market, with Oracle the leader. Although it has significantly less market share, MySQL leads in open-source databases — a fact that warrants further inquiry, the Commission said.

"The Commission's preliminary market investigation has shown that the Oracle databases and Sun's MySQL compete directly in many sectors of the database market and that MySQL is widely expected to represent a greater competitive constraint as it becomes increasingly functional," the Commission said.

Andy Butler, research vice president at analyst firm Gartner, told ZDNet UK that the Commission had made the wrong decision to delay the deal, when US regulators had not objected.

"We are very disappointed at this announcement by the EC," he said. "They [the Commission] are more concerned about open-source ideologies than US regulators, and they believe there is a threat to the open-source purity of MySQL. Commercially, MySQL is less than half a percent of the database market, so there is nothing anti-competitive about what is happening."

Butler believes that the commission has failed to fundamentally understand the nature of open source. "Even if there is some concern about Oracle's stewardship of owning an open-source product, if the MySQL community doesn't like the way that Oracle is taking the product, they will simply fork it," he said. "A MySQL clone would simply rise from the ashes."

However, the Commission said that its investigation had shown that "open-source nature of Sun's MySQL might not eliminate fully the potential for anti-competitive effects."

Ingres, the second-place open-source database provider, said that its business had benefited from customers' concerns over the future of MySQL under Oracle. "The important question is what customers and partners expect [from the deal], and I haven't met one that expects Oracle to make the major investments that would be required for MySQL to present a credible alternative to Oracle's own database," Roger Burkhardt, Ingres's chief executive, said in a statement.