Oracle defends planned Sun deal at EC hearing

Deal will boost competition, not break it, Oracle will claim

Oracle is expected to portray its planned acquisition of Sun Microsystems, and more specifically of Sun's MySQL unit, as a procompetitive move necessary to balance the might of Microsoft in the low end database market during a two-day hearing in Brussels that opened Thursday.

The hearing is being hosted by Europe's top antitrust authority, the European Commission, which last month declared its opposition to the deal on grounds that it would cause a serious reduction of competition in the market for computer databases.

Oracle and the Commission appeared to have reached an impasse concerning MySQL ahead of the hearing. However, competition commissioner Neelie Kroes Wednesday expressed optimism about brokering that will not harm competition.

"I am still optimistic that we can reach a satisfactory outcome that will ensure that there is no adverse impact on effective competition in the European market," Kroes told journalists.

Unlike Oracle's database products, which are expensive and targeted mainly at large corporations, MySQL is a free open source database aimed at smaller clients in a sector of the market where Microsoft is present. Its clients include many Web 2.0 companies and services such as YouTube and Facebook.

With Oracle behind it, MySQL will be better-positioned to compete with Microsoft's SQL Server database, Oracle will claim, according to people close to the company.

However, the distinction it draws between the high end and low end of the database market will be refuted by, among others, Microsoft and SAP, which are intervening at the hearing on behalf of the European Commission.

Monty Widenius, one of the creators of MySQL, will also side with the Commission at the hearing. He is opposed to Oracle taking control of MySQL because he suspects the database giant will not support it. He also will argue that the MySQL and Oracle databases do compete head-on.

The growth of cloud computing will mean that in the near future all databases will be vying head-on as data storage moves from companies' own servers to cloud servers, according to some analysts.

The Commission's list of allies is understood to be much shorter than Oracle's. Those helping the company defend the deal include Vodafone, Ericsson and other Oracle clients such as the U.K.'s National Health Service, Spain's Banco Bilbao Vizcaya Argentaria, U.S. travel management firm Sabre Holdings and Carnegie Mellon University, according to reports.

Hearings in merger cases are conducted out of the eye of the media. Attendants are instructed not to reveal what is said behind the closed doors. For Oracle, it's the last serious chance of convincing the Commission to clear the deal.

It has to submit final proposals to address the Commission's concerns by the end of Monday, in order to allow the regulator enough time to reach a conclusion about the deal by the Jan. 27 deadline.

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