SAP Watch

Nov 12 2009   8:03PM GMT

SAP weighs in on Oracle-Sun, Wall Street Journal

Barney Beal Barney Beal Profile: Barney Beal

The Wall Street Journal, long a recipient of scoops from SAP, earned a little wrath from the company this week when it penned an editorial suggesting CEO Leo Apotheker could smooth the way for an Oracle-Sun merger.

The editorial, published Nov. 5th, reads, in part:

But since the Oracle merger investigation began, some observers have questioned whether the [European] Commission is holding up the merger at the urging of Germany’s SAP, which is a partner but also a competitor of Oracle-even though SAP does not compete with Sun.

It references “a multibillion-dollar industrial espionage lawsuit pending against SAP in the U.S.”

And concludes:

Normal isn’t the word we’d use to describe such behavior. The timing of the letter suggests that Mr. Apotheker either believed, or wanted Oracle to believe, that he could smooth the merger review if he so desired. Nothing came of the offer, and the Commission now seems poised to block the deal. Only the antitrust mandarins in Brussels know for sure if they’d act differently if Mr. Ellison had accepted Mr. Apotheker’s “invitation.”

SAP issued a press release yesterday refuting the claim:

The Wall Street Journal speculated last week that SAP CEO Leo Apotheker may have intended to offer facilitating the Oracle-Sun merger in the ongoing European Commission’s review of the Oracle-Sun deal when he wrote a letter to Oracle CEO Larry Ellison in September. The letter was leaked to The Wall Street Journal.

SAP strongly rejects the misleading speculation in The Wall Street Journal opinion piece. SAP has always said that it stands for openness and choice in the market. In light of the proposed Oracle-Sun merger, we, like many others, have concerns about customer choice in the database market and the future open licensing of Java. We communicated our concerns to both Oracle and Sun at the working level as far back as the end of July 2009.

Since there was no response, our CEO Leo Apotheker took the initiative and wrote to both Oracle and Sun CEOs in the middle of September to voice our concerns again, offer a dialogue and attempt to clarify the issues. We have not heard back from Oracle, but instead found Leo Apotheker’s letter leaked to the press last week. This is both telling and disappointing as it demonstrates that there is no real interest by Oracle to listen and explain how it wants to ensure the required level of customer choice in the database market as well as open access to Java.

Java is an important programming language that has brought about significant innovation within the entire IT industry – from large-scale enterprise applications to mobile devices and payment cards.

SAP has raised the same concerns with the U.S. Department of Justice and the European Commission as well as a number of other antitrust authorities throughout the world, and will continue to cooperate with these agencies in an open and transparent manner in the interests of its customers and partners. We at SAP have the highest respect for the U.S. Department of Justice and the Federal Trade Commission, the European Commission as well as for any other antitrust and regulatory agency in the countries in which we do business.

Leaked letters, “telling and disappointing” reactions and “misleading speculation” all make for good drama, particularly when SAP and Oracle are involved, be it over sailboats, retail software acquisitions, third party maintenance lawsuits or European regulators.

But SAP does seem to have some legitimate concern about the deal, both around Oracle’s potential ownership of Java and whatever competitive advantage it may gain by bundling hardware, databases and applications. SAP CTO Vishal Sikka said as much in a recent blog regarding Java (emphasis his):

The Java industry is currently going through important changes, and there are many discussions around the openness of Java and the Java Community Process (JCP). To date, the JCP is heavily dominated by Sun Microsystems which was not always to the benefit of all parties interested in Java. Java is the lifeblood of the IT industry, and IT is a fundamental underpinning of the way business is conducted in the 21st century. The technical interfaces that are jointly developed by the community should be immune from bias, and the community should be able to work even closer together in the spirit of cooperation to continue the Java success story. To ensure the continued role of Java in driving economic growth, we believe it is essential to transition the stewardship of the language and platform into an authentically open body that is not dominated by an individual corporation.

With Oracle and the European Commission headed for a showdown, it certainly looks like SAP will have more opportunities to state its case.

The question remains, whether the EC or SAP has the strength to stop it and whether Sun has the wherewithal to withstand a long negotiation. Some Sun VARS are already chafing.

Do you think SAP will have any influence? Should they?

Vinnie Mirchandani for one is happy the EC is getting involved. Does the tech industry need government intervention? Without question, Vinnie says.

It screams for periodic government scrutiny. Especially when vendors pull shenanigans like misleading and scaring customers on the use of third party maintenance to protect their 95% gross margins. Or selling printer ink at  $5,000 a gallon and still misleading consumers about ink levels in their cartridges so they buy more prematurely of that precious commodity.

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