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Oracle, EC Open Fire Over Open Source

Oracle is bruising for a battle with European regulators over its Sun acquisition.





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$7.4 billion





has provoked a mudslinging match between the database giant and Brussels after the European Commission issued a formal


to the


on Monday.



voiced its


about Oracle's



MySQL database

technology, which has strong links to the open source community.

The statement of objection, which was revealed in an Oracle SEC filing, went on to discuss the deal's "potential negative effects on the competition in the market for database products."

Oracle immediately shot back with a stinging criticism of the European Commission, claiming that the objection revealed a "profound misunderstanding" of both database competition and open source dynamics.

"It is well understood by those knowledgeable about open source software that, because it is open source, it cannot be controlled by anyone," added Oracle. "That is the whole point of open source."

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The E.C., however, is clearly bruising for a battle. Jonathan Todd, the commission's spokesman, dismissed Oracle's barbs as "facile and superficial" during a Brussels press briefing Tuesday.

"Despite the fact that MySQL is open source, Oracle would be the exclusive holder of the copyright and the trademark for MySQL code," he said. "Oracle is the leading proprietary database vendor and MySQL is the leading open source data vendor, and would appear to constitute an important competitive force in the database market at the moment."

When the dust settles, however, people will be wondering what Oracle's next move will be.

Certainly, the tech bellwether is no stranger to antitrust disputes and has a good track record of battling bureaucrats. The database giant, for example, successfully fought off the Department of Justice's attempt to block its




At least one analyst argues that Oracle will face a whole different ball game on the other side of the pond.

"We believe there may be a significant difference between anti-trust enforcement in the United States and Europe," wrote Pat Walravens, an analyst at JMP Securities, in a note released Tuesday. "U.S. anti-trust enforcement focuses on 'monopolization,' while the European Commission seeks to prevent the abuse of a dominant position."

The EU's overriding concern may be to prevent Oracle from using its dominant position in enterprise software to inhibit effective competition, according to Walravens, similar to Brussels' battle with


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. This case could prove to be more challenging for Oracle than it first appears, he added.

With MySQL a constant source of controversy, Brussels may attempt to force Oracle to spin off either all or part of the technology into a separate entity. Oracle's bullish tone, however, has given no indication that it plans to offer any concessions.

"Oracle wants it all, Sun stands to lose it all and the European Commission apparently had no other choice but to issue this statement of objections because Oracle just doesn't want to understand," wrote Florian Mueller, a former MySQL shareholder, in an email to



There has also been speculation that Oracle could walk away from the Sun deal, which would be potentially disastrous for the beleaguered Sun. The E.C.'s opposition to the deal has already proved problematic for Santa Clara, Calif.-based firm, which recently announced plans to cut

3,000 jobs

. Fiery Oracle CEO Larry Ellison has already


that the E.C. probe is costing Sun $100 million a month.

With a cash haul of more than $20 billion exiting its recent first quarter, Oracle certainly has money to burn. The recent comments coming out of the software maker, however, suggest that CEO Larry Ellison is rolling up his sleeves to do battle with Brussels. Not one to step down from a challenge, the Oracle chief is clearly confident the Oracle can still swallow Sun.

News of the E.C. objection had relatively little impact on the Sun's shares Tuesday. The company's stock dipped 6 cents, or 0.73%, to $8.18, mirroring the broader dip in tech stocks that saw the


fall 0.43%. Oracle's shares also slipped, falling 8 cents, or 0.37%, to $21.75.

-- Reported by James Rogers in New York