PeopleSoft buyout 'would be anticompetitive'

IBM has told the US Department of Justice (DoJ) that if Oracle was allowed to acquire Peoplesoft, it would reduce the enterprise software market to dependency on a few huge players.

According to a report in Tuesday's Financial Times, IBM was approached by the DoJ as part of its investigation into Oracle's proposed takeover of PeopleSoft, and the effect such a move would have on the market. IBM told the DoJ that if the acquisition was allowed, it would mean just three dominant enterprise software companies -- Oracle/PeopleSoft, SAP, and Microsoft -- would rule the market.

Buell Duncan, general manager of developer relations at IBM, confirmed that the company had been approached by the DoJ as part of its investigation. "This is clearly not the type of deal we would like to see succeed," said Duncan, adding that IBM is not interested in entering the market because its business partners have "generated billions of dollars in revenue".

James Governor, principal analyst at RedMonk is not surprised that IBM would prefer PeopleSoft -- which recently completed its acquisition of J.D. Edwards -- to remain separate from Oracle. "If Oracle were to acquire Peoplesoft, the company that would most suffer is IBM," he said. "When Duncan said IBM had made billions of dollars from its partners, Peoplesoft and JD Edwards account for a very large portion of that."

Peoplesoft and J.D. Edwards have positioned themselves to sell IBM's middleware and its underlying platform, which is something that Oracle would like to change. "Peoplesoft and J.D. Edwards have made a very strong commitment to IBM middleware -- J.D. Edwards uses IBM's development tools, database, portal and IBM Tivoli's system management tools," said Governor. "There is no doubt that Oracle would look to standardise on Oracle infrastructure instead. It is critical to IBM that the deal does not go through," he added.