Wikileaks cable offers new insights into Oracle-Sun deal

US authorities lobbied the EU on Oracle's behalf, and the loss of MySQL would have 'destroyed' the merger, the cable reveals

US authorities met with European officials on behalf of Oracle with regard to its $US7.4 billion acquisition of Sun Microsystems, according to a US diplomatic cable recently released by activist group Wikileaks.

Oracle faced close scrutiny over the deal from EU antitrust officials. In part, regulators there were concerned over the future health of the open-source MySQL database under Oracle ownership, since Oracle's own proprietary database was already a dominant presence in corporate data centers.

In October 2009, Oracle met with U.S. officials and urged them to "push for rapid European Commission

approval of the merger," according to the Oct. 27, 2009, cable from the United States Mission to the European Union in Brussels, which was released Friday by Wikileaks.

Oracle told U.S. authorities that the EU was "pressuring it to divest MySQL as a condition for approval of the merger," a move that would "destroy" the deal, according to the cable, which was first flagged by Australian tech site iTnews.

The company was depending "on keeping MySQL to make the merger economically viable, since Oracle plans to expand the market for MySQL and its associated support contracts," the cable adds.

Moreover, "Oracle would be forced to take a huge accounting loss if it sold MySQL, since it believes that Sun overpaid in paying nearly $1 billion for MySQL in 2008, and it would only be able to sell it for a fraction of this sum," it adds.

Oracle also told U.S. officials that Sun would go bankrupt if the deal didn't go through, according to the cable.

"DOJ/Antitrust views this matter as a high priority," the cable adds. "Its senior officials and investigative staff are currently engaging productively and intensely with their [EU Directorate General for Competition] counterparts, and are in close touch with Oracle and Sun, in the hopes of preventing a divergent outcome."

EU officials approved the merger in January 2010 and it closed shortly thereafter.

An Oracle spokeswoman declined to comment on the cable's contents on Tuesday.

While closed-door entreaties from U.S. authorities may have helped ease the EU's concerns over the deal, in December 2009 Oracle also issued a list of public commitments with regard to keeping MySQL viable in a competitive marketplace.

Despite the worries Oracle reportedly raised over losing MySQL, post-merger it has seemed to focus more on Sun's hardware business, particularly for its Exadata and Exalogic data-processing and application server machines.

So far, Oracle has not appeared to go back on the commitments it made for MySQL, and the company's engineering efforts for the database have drawn high praise from some community members.

However, it is also facing a growing wave of competition from third-party companies that sell support contracts for MySQL as well as offshoot versions of the database.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris's e-mail address is Chris_Kanaracus@idg.com

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Tags business issuesopen sourceantitrustSun Microsystemshardware systemslegalsoftwareOracleMergers and acquisitions

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Chris Kanaracus

IDG News Service
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