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Come early December, Oracle will meet with European Commission regulators to urge their approval of its merger with Sun Microsystems. "Two people with knowledge of the matter" tell Reuters that "Oracle has asked for a hearing which has been fixed for December 10."

Should make for an interesting meeting given Oracle's refusal to take the EC's concerns about the future of Sun's MySQL database seriously. Certainly, it's difficult to imagine Oracle caving to the Commission's demands when it has criticized the group's findings as a "profound misunderstanding" of the database market and open source.

And if not that, then what? Would Oracle abandon the deal instead? That too seems unlikely because it would mean delaying CEO Larry Ellison's plan to transform Oracle into the next IBM. As Ellison said in October, "T. J. Watson's IBM was the greatest company in the history of enterprise in America because its combination of hardware and software was running most of the enterprises on the planet. We think with the combination of Sun technology and Oracle technology we can succeed and beat IBM. That's our goal."

Given the EC's concerns about the Sun acquisition and Oracle's refusal to address them, what other option is there?

Story Copyright (c) 2009 AllThingsD. All rights reserved.

With possible action by the Federal Trade Commission looming, an unidentified Dell executive is cited prominently in legal documents as a person who might exonerate Intel, or at least mitigate the severity of the charges leveled against it for alleged antitrust behavior. So, what is known about this Dell mystery man?

This week the Dell executive, referred to as "Mr. A," was cited throughout the European Union ombudsman's "decision" on on a complaint filed by Intel about the European Commission's ruling against the chipmaker. Ombudsman P. Nikiforos Diamandouros' November 18 decision found "maladministration" on the part of the Commission because of its failure to make a "proper note" of a meeting with Dell--represented most prominently by Mr. A in the the ombudsman's decision.

Diamandouros has been the The European Union's ombudsman since April of 2003.

Most importantly, Mr. A is brought up by Intel as a person who has made exculpatory statements--and therefore could refute allegations such as those made about Intel and Dell in New York Attorney General Andrew Cuomo's complaint against the chipmaker.

And who is Mr. A? He was "a senior Dell executive" and the person "responsible for Dell's relationship with Intel," according to the ombudsman's published statement.

What else is known about Mr. A? Intel asserts in its complaint to the Commission--which the ombudsman responded to in its decision--that "Mr. A's FTC [Federal Trade Commission] testimony exonerates Intel and contradicts the allegations contained in the statement of objections concerning Dell's relationship with Intel."

And Intel has had more to say about this person. "Mr. A again gave sworn testimony confirming that the key points made in his 2003 FTC testimony, to the effect that Dell did not have an exclusive relationship with Intel and that Intel did not 'threaten' or 'punish' Dell for considering a dual-source [Intel and AMD] strategy."

Also in the ombudsman's decision--which refers to Intel as the complainant: "It is clear from these events that the Commission sought to conceal and suppress exculpatory evidence. Also in the complainant's view, this misconduct (and the failure to make a complete note of the meeting which would have eliminated any debate as to what Mr. A said) constitutes a serious act of maladministration."

Intel spokesman Chuck Mulloy said Thursday that Intel continues to talk to the FTC. "Yes we are talking. We are continuing to answer their questions concerning our business practices and now we are also explaining the settlement we just completed with AMD [Advanced Micro Devices]," Mulloy said.

The European Commission on Monday formally dug in its heels over Oracle's planned acquisition of Sun Microsystems, but Oracle accused the regulatory body of "profound misunderstanding" in a rebuttal that declared its intention to fight the opinion.

The regulatory body issued a statement of objections about the merger, according to a Securities and Exchange Commission filing from Sun Microsystems. The open-source MySQL database software is the sole issue of concern in the matter, Sun said in the filing.

"The Statement of Objections sets out the Commission's preliminary assessment regarding, and is limited to, the combination of Sun's open source MySQL database product with Oracle's enterprise database products and its potential negative effects on competition in the market for database products," Sun said in the filing.

Oracle, though, fired back immediately, saying the objection "reveals a profound misunderstanding of both database competition and open-source dynamics." And indicating that other technologies are in limbo during the European deliberations, Oracle said, "Oracle's acquisition of Sun is essential for competition in the high-end server market, for revitalizing Sparc, and Solaris and for strengthening the Java development platform."

Meanwhile, the U.S. Justice Department reiterated its stance that the acquisition isn't anticompetitive. But given the gulf between Oracle and EC perspectives and Oracle's unwillingness to spin the MySQL software group off, it appears the matter won't be resolved soon.

MySQL is open-source software, meaning anyone may see, modify, and distribute the human-readable source code that underlies the software package computers actually run. Oracle's core database product is proprietary, meaning they don't grant those freedoms. MySQL is used widely at Facebook and Google among other companies, and competes to some extent with Oracle's existing products, arguably indirectly by expanding into newer markets to which Oracle's software isn't as well-suited.

Oracle castigated the commission in its statement:

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

The database market is intensely competitive with at least eight strong players, including IBM, Microsoft, Sybase and three distinct open-source vendors. Oracle and MySQL are very different database products. There is no basis in European law for objecting to a merger of two among eight firms selling differentiated products. Mergers like this occur regularly and have not been prohibited by United States or European regulators in decades...

Sun's customers universally support this merger and do not benefit from the continued uncertainty and delay. Oracle plans to vigorously oppose the Commission's Statement of Objections as the evidence against the Commission's position is overwhelming. Given the lack of any credible theory or evidence of competitive harm, we are confident we will ultimately obtain unconditional clearance of the transaction.

The Justice Department, which is in Oracle's camp, detailed its reasoning in a statement from Deputy Assistant Attorney General Molly Boast of the Justice Department's Antitrust Division.

And though Boast pointed to the department's "strong and positive relationship on competition policy matters" with the EC, she also said, "At this point in its process, it appears that the EC holds a different view. We remain hopeful that the parties and the EC will reach a speedy resolution that benefits consumers in the commission's jurisdiction."

The Justice Department reasoned that there are other database packages available and that open-source projects can be forked by those who disagree with corporate sponsors' handling of the software.

"Several factors led the (Justice Department's antitrust) division to conclude that the proposed transaction is unlikely to be anticompetitive. There are many open-source and proprietary database competitors. The division concluded, based on the specific facts at issue in the transaction, that consumer harm is unlikely because customers would continue to have choices from a variety of well established and widely accepted database products," Boast said. "The department also concluded that there is a large community of developers and users of Sun's open source database with significant expertise in maintaining and improving the software, and who could support a derivative version of it."

Experts say Intel has been instrumental in driving down PC prices, one of the key indicators of competition and one charge New York's Attorney General cannot easily level against Intel in its antitrust lawsuit.

New York Attorney General Andrew M. Cuomo on Wednesday filed a federal lawsuit against Intel accusing it of paying computer makers rebates to illegally maintain its monopoly power and preventing AMD from gaining business with PC makers.

One of the operative charges in the complaint centers on prices. "Intel launched an illegal campaign to deprive AMD of distribution channels and consumers of product choice and lower prices," the complaint alleges.

Not so fast, say some experts. "Prices are falling, buyers are not complaining about Intel's loyalty discounts, and the lower prices produce obvious and immediate benefit for consumers," said Joshua D. Wright, professor at George Mason University School of Law, and a scholar in residence at the Federal Trade Commission until 2008.

"Given the intuitive and easy to grasp nature of the consumer benefits of discounting contracts in the Intel case, I suspect that judges will be less likely to condemn these practices without real proof of actual consumer harm. I'm skeptical that AMD, (New York), or the (Federal Trade Commission) will be able to produce that here," Wright said.

And prices continue to fall. One of the most recent examples of steep downward PC price pressure is ... Read more

Oracle is taking a hard line in dealing with European Union objections to its planned acquisition of Sun Microsystems, according to a Financial Times report Tuesday.

EU antitrust regulators are concerned that Oracle, which has a large business in proprietary software, won't be a good home for Sun's open-source MySQL database business. According to the report, Oracle is unyielding, offering no concessions to deal with the EU's concerns.

That stance could lead the regulators to issue a formal complaint objecting to the deal, and that move could occur within days, according unnamed sources in the story. Neither the EU or Oracle commented for the story.

MySQL's former chief executive, Marten Mickos, has urged the EU to approve the acquisition, but cofounder Monty Widenius has objected. Sun shareholders and the U.S. Justice Department have approved the deal.

SAN FRANCISCO--Sean Maloney has some issues with the European Commission's antitrust case against his company, Intel, which he says must either "thrive or...die."

Last week, Maloney was promoted, along with David "Dadi" Perlmutter, to co-manage the reorganized--and massive--Intel Architecture Group. Maloney, an executive vice president, had been Intel's sales chief, and many observers see him as the odds-on favorite to be Intel's next chief executive. (Current CEO Paul Otellini, though, is likely to be in his post for some time to come.)

Sean Maloney, executive vice president

(Credit: Intel)

On Monday, the European Commission published a "nonconfidential version" of its May 13 decision against Intel, which imposed a fine of $1.45 billion against the chip giant. That decision found that Intel broke EC Treaty antitrust rules (Article 82) by engaging in illegal practices to exclude competitors from the market for x86 processors, which are the basis for a vast swath of consumer and business computers.

The EC action was based on complaints from Intel's chief rival, Advanced Micro Devices. Intel appealed the decision in July to a European court, saying that "evidence was ignored or misinterpreted."

In an interview this week at the Intel Developer Forum, Maloney explained how Intel's business model, forged after a near failure of the company in early 1980s, requires it to be aggressive.

"I joined the company in 1982. We were getting our butt kicked by Asian competitors," Maloney said. "A few years after I joined, [then president] Andy Grove made the decision, let's focus on microprocessors. We exited all the other businesses, we laid off a third our staff. The company was hemorrhaging money," he said.

In 1983, Intel abruptly exited the memory chip business after Japanese manufacturers drove down prices and made that business unprofitable.

"So we picked one thing to do well, and we put everything behind that," Maloney said. "We're not like a Samsung that has 50 different businesses, or a Sony with 20 different businesses, or an Apple with a bunch of different businesses. We were a company that specialized. If you're a company that specializes, you either thrive or you die. You don't have eggs in other baskets."

As a specialist in PC processors, Intel achieved tremendous success. "As a consequence," Maloney said, "the scrutiny has come along with it. Some of the scrutiny is fair. Some of it we're strongly pushing back on."

He continued: "We can show how the consumer has benefited from the microprocessor in terms of constant, constant price reductions. It's pretty unmatched in every other industry. The industry has a long history of cutting prices. And I don't know a single day in the last decade when you couldn't walk into a shop a buy competitor's product. We believe it's an open market."

European antitrust regulators on Monday published internal e-mails that detail alleged antitrust behavior by Intel.

The European Commission Monday published a "non-confidential version" of its May 13 decision against Intel, which imposed a fine of $1.45 billion against the chip giant. That decision found that Intel broke EC Treaty antitrust rules (Article 82) by engaging in illegal practices to exclude competitors from the market for "x86" central processing units (CPUs).

The EC action was based on complaints from Intel's chief rival, Advanced Micro Devices.

Intel appealed the decision in July to a European court, saying that "evidence was ignored or misinterpreted."

Today, the EC fired back. Some of Monday's particulars from the EC press release include:

• Intel rebates to Lenovo during year 2007 "were conditioned on Lenovo purchasing its CPU needs for its notebook segment exclusively from Intel. For example, in a December 2006 e-mail, a Lenovo executive stated: 'Late last week Lenovo cut a lucrative deal with Intel. As a result of this, we will not be introducing AMD based products in 2007 for our Notebook products'."

• Intel rebates to Dell from December 2002 to December 2005 were conditioned on Dell purchasing CPUs exclusively from Intel. For example, in an internal Dell presentation of February 2003, Dell noted that should Dell switch any part of its CPU supplies from Intel to its competitor AMD, Intel retaliation "could be severe and prolonged with impact to all LOBs [Lines of Business]."

• Intel rebates to HP from November 2002 to May 2005 were conditioned on HP purchasing no less than 95 percent of its CPU needs for business desktops from Intel (the remaining 5 percent that HP could purchase from AMD was then subject to further restrictive conditions set out below). In a submission to the Commission, HP stated that "Intel granted the credits subject to the following unwritten requirements: a) that HP should purchase at least 95% of its business desktop system from Intel ..." An HP executive wrote: 'PLEASE DO NOT... communicate to the regions, your team members or AMD that we are constrained to 5% AMD by pursuing the Intel agreement.'"

• The EC also cited "Naked Restrictions" such as: "Intel payments to Acer were conditioned on Acer postponing the launch of an AMD-based notebook from September 2003 to January 2004. For example, in a September 2003 email, an Intel executive reported: "good news just came from [Acer Senior Executive] that Acer decides to drop AMD K8 [notebook product] throughout 2003 around the world...They keep pushing back until today, after the call with [Intel executive] this morning, [Acer Senior Executive] just confirmed that they decide to drop AMD K8 throughout 2003 around the world. [Acer Senior Executive] has got this direction from [Acer Senior Executive] as well and will follow through in EMEA [Europe Middle East and Africa region]".

AMD was quick to chime in with a comment Monday. "This is the first time that Intel has had to confront now publicly available facts of its illegal behavior and it won't be the last. The U.S. FTC and New York Attorney General's continuing investigations and AMD's civil case against Intel will provide other clear demonstrations of Intel breaking the law, and we remain confident that we will win our U.S. civil case against Intel, which goes to trial in March," AMD said.

Intel also issued a response Monday. "There is nothing new here. This Decision reflects the underlying bias we have come to expect from the case team that ran this investigation," Intel said. "The Commission relied heavily on speculation found in e-mails from lower level employees that did not participate in the negotiation of the relevant agreements," Intel said. "At the same time, they ignored or minimized hard evidence of what actually happened, including highly authoritative documents, written declarations and testimony given under oath by senior individuals who negotiated the transactions at issue."

Intel continued: "Also, the Commission consistently construed ambiguous documents in a manner adverse to Intel, while overlooking or dismissing authoritative documents as 'insufficiently clear' when they contradicted the Commission's case. This pattern occurred across the board with respect to documents and statements submitted not only by Intel but also by third parties. The result was that the Commission dismissed or ignored extensive exculpatory evidence."

This was originally posted at ZDNet's Between the Lines.

Intel said Europe's top antitrust regulator failed "to meet the required standard of proof" when it fined the chipmaker $1.45 billion in May for anticompetitive behavior against Advanced Micro Devices. (The news comes as Apple named Intel's top lawyer Bruce Sewell as its general counsel.)

Intel noted that it would appeal, and the company recently laid out its case against the European Commission, the administrative wing of the European Union. In a nutshell, Intel argues that the EC:

• Failed to address evidence that AMD was increasing market share during the period in question;
• Failed to establish a causal link between Intel's discounts and customer decisions not to use AMD;
• Failed to analyze how those discounts impacted consumers at all;
• And failed to stick to legal procedures as it decided to fine Intel.

The stakes are high, as AMD cited the EC fine as a big win. A key passage from the appeal:

The Commission fails to prove that Intel's rebate arrangements were conditional upon its customers purchasing all or almost all of their x86 CPU requirements from Intel. In addition, the Commission uses an 'as efficient competitor' ('AEC') test to determine whether Intel's rebates were capable of restricting competition but it commits numerous errors in the analysis and assessment of the evidence relating to the application of that test. The Commission also fails to address other categories of evidence relevant to the effects of Intel's discounts.

The company is asking that the EC decision be nixed completely, "annul or reduce substantially the level of the fine imposed" and pay Intel's legal costs.

Neelie Kroes

(Credit: European Commission)

IBM and Hewlett-Packard could not have planned it any better.

The European Union has launched an in-depth investigation into Oracle's acquisition of Sun, potentially delaying the merger by several more months. In doing so, the EU is actually guaranteeing the demise of Sun's hardware business and gifting it to Sun's competitors by misunderstanding the deal's impact on open source, generally, and on MySQL, specifically.

If you haven't been paying attention, the delay on the merger due to U.S. and EU scrutiny has already resulted in two shockingly bad quarters from Sun. Many enterprise customers are already moving to competitors like IBM because of the uncertainty surrounding the future of Sun products, The Wall Street Journal reports.

Further delay will only compound the problem.

Unlike the U.S., which approved the deal, the EU's Competition Commissioner Neelie Kroes is concerned that Oracle's takeover of Sun will end up diminishing competition:

Systems (like MySQL) based on open-source software are increasingly emerging as viable alternatives to proprietary solutions. The Commission has to ensure that such alternatives would continue to be available.

The Commission doesn't have to. MySQL's open-source license already does. It's open source: even Oracle can't put the open-source genie back in the bottle once it has been released, as MySQL has, under the GNU General Public License.

Consider: some of the folks cheering loudest for the EU to clamp down on the proposed merger, like representatives from Monty Program, have already demonstrated Oracle's (and Sun's) lack of control over MySQL. Monty Program has created a significant fork, or derivative, of the MySQL database, and stands to gain much by the EU's obstructionism.

In delaying the merger, the EU isn't helping MySQL. It's helping its competitors, including Drizzle, OurDelta, MariaDB (Monty Program's fork), Percona, etc.

Competition within and around MySQL is alive and well, regardless of Oracle. After all, as former MySQL CEO Marten Mickos has been saying for years, MySQL has never really competed with Oracle, anyway. MySQL serves (and has helped to create) a very different market: the Web database market.

When asked in April if Oracle's bid for Sun would end up hurting MySQL, Mickos responded: "MySQL works for Web-based applications. Oracle is for older, legacy applications." The vast majority of Oracle's revenue comes from enterprise IT. The vast majority of MySQL's revenue comes from Web companies like Facebook, Google, etc.

MySQL and Oracle don't really compete. They live in two very different markets.

So, if anything, Oracle's acquisition of Sun helps it leverage MySQL into a market--the growing Web database market--that its own technology is ill-equipped to manage. It also gets a lower-cost product with which to bludgeon its real enemy, Microsoft, coupled with a greater footprint in the rising open-source developer community.

Open source is not the enemy in this deal. Microsoft is.

The EU, however, has made itself an enemy to Oracle, Sun, and MySQL by holding up the merger, a situation that will only get worse due to its glacial pace, as CIO.co.uk's editor Martin Veitch suggests. Customers are not the beneficiaries of its intervention: Sun's server competitors like IBM are.

Though the EU purports to be in tune with open source, its meddlesome muddling reveals a surprising ignorance of open source, and shows a complete disregard for MySQL's true market opportunity.

UPDATE @ 6:59 Pacific on 9/4/09: I solicited comment from Gartner vice president and Distinguished Analyst, Donald Feinberg, who had this to say:

The EU does not understand open source. This is clear by using DBMS (MySQL) to extend the deadline. It also is clear that this is an attempt to use MySQL as a cover-up to a political agenda. It is protectionism at its worst.

The EU is entering deep water here, water that it clearly does not adequately understand.

Follow me on Twitter @mjasay.