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The European Commission must be feeling a bit silly right about now. Despite insisting that Oracle has not responded to its requests for comment and concessions in its planned acquisition of Sun Microsystems (and the open-source database MySQL), Amazon.com recently offered the EC all the proof it needs that MySQL competition remains alive and well.

Competition at pennies an hour.

(Credit: Amazon)

For those who missed it, Amazon announced last week a fork of the popular MySQL database, called RDS (Relational Database Service). RDS is essentially a hosted version of MySQL, one that developers can write to at the minuscule cost of pennies per hour.

Oracle hasn't even started with MySQL yet, and it already faces significant competition, not to mention the other MySQL forks (e.g., Drizzle).

As Redmonk analyst Stephen O'Grady writes:

From here, it seems fairly clear that while RDS will not be the best option for every MySQL user, it will find a more than adequate market of customers who are willing to trade money for time, as (former MySQL CEO) Marten Mickos might put it. Assuming that Amazon can realize its typical economies of scale by amortizing the management and administration costs of the service over a wide array of machines, the product should more than pay for itself simply by widening the addressable market.

How much wider will it make the addressable market? At a minimum, it will lower the barriers to entry for customers with relational needs (read: most customers) and a lack of cloud expertise. It will be fascinating to see, however, if Amazon has far grander ambitions in mind.

Interesting, and somewhat unfair to Oracle. Presumably Amazon's entrance into the MySQL market is A-OK because Amazon isn't currently a database company, but it is a significant and growing infrastructure provider. Why should it get to own a complete stack, but Oracle can't?

That, after all, is what Oracle is attempting to accomplish with the Sun/MySQL acquisition. Sun gives it hardware, while MySQL gives it a strong entry into the Web database market and an effective hedge against Microsoft in lower-end enterprise needs.

Oracle's bid for Sun/MySQL, in other words, isn't about squelching competition, but rather about enhancing it. Amazon's RDS proves that strong, viable competitors to MySQL can arise from within the MySQL community, which disproves the EC's argument that Oracle's control of MySQL will somehow crush competition.

And if the deal doesn't hurt competition, as Amazon RDS all-but-proves it doesn't, then the EC's opposition is hollow and should be shelved, as The 451 Group's Matt Aslett argues.

It's time for the EC to acknowledge it was wrong, and move on. Amazon surely has. But until the EC makes a final decision, Oracle (and MySQL) can't.

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.

Expanding its cloud-computing storage services to a higher level, Amazon.com unveiled a new option called Amazon RDS for companies that want to store information in a database on the other side of the Internet.

The suite of Amazon Web Services (AWS) already included a database option called SimpleDB, a basic database with its own interface standard for storing data and retrieving it. The Amazon Relational Database Service, in contrast, uses a more standard database interface, embodied in this case in an online implementation of the open-source MySQL software, the company said Monday.

"With Amazon RDS, you get full native access to a MySQL database," specifically, version 5.1 of the Sun Microsystems technology, the company said on its Amazon RDS site. "This means Amazon RDS works with your existing tools, applications, and drivers. You can port an existing database to Amazon RDS without changing a line of code--just point your tools or applications at your Amazon RDS DB instance, and you are ready to go."

Amazon raised minimized hassle and increased flexibility as reasons to use the service, which is currently in beta testing.

"Every hour that you don't spend fiddling with hardware, tracing cables, installing operating systems, or managing databases is an hour that you can spend on the unique and value-added aspects of your application," Jeff Barr, the company's Web services evangelist, said in a blog post. "I should point out that RDS enables a lot of really enticing development and test scenarios. You can set up a separate database instance for each developer on a project without making a big investment in hardware."

With its years-long effort, the Net retailer has built Amazon Web Services into a formidable presence in the information technology world. Competitors include Google App Engine, a computing foundation that can run Java or Python programs on Google's own BigTable database technology, and Microsoft's Azure, which is set to offer access to Windows servers in the cloud when it formally launches in November.

One potentially interesting rival is Oracle, already a giant in the database market and, if it can overcome European regulatory concerns, the future owner of MySQL assets. Because MySQL is open-source software, though, anyone may use and modify it, even without its copyright holders' permission.

The biggest competitor to this model is doing things the old way, with companies running their own computing infrastructure. Cloud computing poses security and trust issues for many companies considering whether to put their data and business applications on somebody else's computer systems. But researchers such as Gartner, an influential but not radical analyst firm, now recommend that companies look seriously at cloud computing.

Amazon is working on greater robustness for Amazon RDS. It offers automated backup, and it later plans to offer a "high-availability" option at no extra charge, with which customers can create a separate instance of a database in a different geographic region.

As with all services on AWS, Amazon RDS is priced on an as-used basis--with per-hour charges according to the server memory requirements of the database: 11 cents per hour for a small database of 1.7GB of RAM; 44 cents for large, or 7.5GB; 88 cents for extra-large, or 15GB; $1.55 for double extra-large, or 34GB; and $3.10 for quadruple extra-large, or 68GB. There also are charges for the size of data stored, the number of input-output requests, the amount of data written to the database, and the amount of data read from the database.

Former MySQL leader Mårten Mickos on Thursday urged European Union regulators to approve Oracle's acquisition of Sun Microsystems and its MySQL database group, arguing that further waiting undermines the very competitiveness the EU is trying to protect.

In a letter to Neelie Kroes, the European Commission's commissioner for competition, Mickos said the regulators were correct to question whether Oracle buying Sun and its open-source database software would harm the market. But Mickos, who ran MySQL from 2001 until 2009, believes that the Oracle acquisition won't hurt competition--and that holding the acquisition up will:

"Every new day of uncertainty is potentially very harmful to the various businesses of Sun, reducing competition in the market. A delay in the closing of this transaction is therefore only going to work against the respectable goal that you set out to achieve when launching the probe into this acquisition," Mickos wrote in the letter. (See this separate post with the full text of Mickos' letter to the EU.)

Mårten Mickos, surrounded by inflatable MySQL dolphin mascots.

(Credit: Benchmark Capital)

It's not clear what effect Mickos' letter will have on the regulators, but Mickos knows MySQL's business well, and Oracle can use any help it can get in dealing with the acquisition. The U.S. Department of Justice approved the Sun acquisition in August.

Mickos, now entrepreneur in residence at Benchmark Capital, said in an interview that he no longer has anything financially to gain from the transaction. Instead, he's motivated now by trying to help the employees still at Sun--and moreover, its MySQL unit--urging rational discussion about the matter.

"I couldn't live with the fact that I'm not taking action," Mickos said.

Mickos declined Oracle's advances when MySQL was independent, but he agreed to Sun's acquisition in 2008.

In September, the European Commission said MySQL was at the heart of its investigation of the Sun acquisition:

The Commission's preliminary market investigation has shown that the Oracle databases and Sun's MySQL compete directly in many sectors of the database market and that MySQL is widely expected to represent a greater competitive constraint, as it becomes increasingly functional.

The Commission's investigation has also shown that the open-source nature of Sun's MySQL might not eliminate fully the potential for anticompetitive effects. In its in-depth investigation, the Commission will therefore address a number of issues, including Oracle's incentive to further develop MySQL as an open-source database.

Oracle Chief Executive Larry Ellison said MySQL competes in a different part of the database market than Oracle's existing products and that Oracle has no plans to spin MySQL off into a separate company.

Mickos summarized his argument this way:

1. Oracle has as many compelling business reasons to continue the ramp-up of the MySQL business as Sun Microsystems and MySQL previously did, or even more.

2. Even if Oracle, for whatever reason, would have malicious or ignorant intent regarding MySQL (not that I think so), the positive and massive influence MySQL has on the DBMS market cannot be controlled by a single entity--not even by the owner of the MySQL assets. The users of MySQL exert a more powerful influence in the market than the owner does.

MySQL is used to power large-scale Web sites with many servers, a role for which Oracle's back-end database software isn't suited, he argued. It's therefore in Oracle's interest to boost the MySQL business, Mickos said.

As evidence for his case, Mickos pointed to Oracle's 2005 acquisition of InnoDB, whose database engine software is used within MySQL. "Oracle increased their investment in InnoDB since that time, making MySQL a stronger player in the market," he said.

And perhaps reflecting his new role at a venture capital firm, Mickos concluded with a note about the broader effect of the EU's actions:

"If...it becomes difficult or impossible for large companies to acquire open-source assets, then venture investments in open-source companies will slow down, harming the evolution of and innovation in open source, which would result in decreased competition," he said.

Mårten Mickos

As the European Commission continues to evaluate the potentially deleterious effects of Oracle's proposed acquisition of Sun Microsystems and its open-source MySQL database, concern is rising that delay will harm MySQL without helping competition.

One who shares this concern is former MySQL CEO Mårten Mickos. On Thursday, Mickos sent a letter to Neelie Kroes, the European Union's competition commissioner, urging that the deal be approved for the good of the market and MySQL. He also spoke with CNET News' Stephen Shankland on Thursday.

Below is the edited full text of the letter.

Helsinki 8 Oct 2009

Mrs. Neelie Kroes
Commissioner for Competition
European Commission, J70
B-1049 Brussels/Brussel
BELGIQUE/BELGIE

Dear Commissioner Kroes,

I am writing to you regarding your review of Oracle's pending acquisition of Sun Microsystems. As I understand it, the EU Commission is concerned about a risk of undue concentration of power in the database market. Having been the CEO of MySQL from 2001 to 2009, and built a business that was serving a new market unmet by Oracle and others, I can agree with the questions posed, but I do not share the concerns that have been expressed. In the following, I will explain why.

In brief, my reasoning is as follows:

1. Oracle has as many compelling business reasons to continue the ramp-up of the MySQL business as Sun Microsystems and MySQL previously did, or even more.
2. Even if Oracle, for whatever reason, would have malicious or ignorant intent regarding MySQL (not that I think so), the positive and massive influence MySQL has on the DBMS market cannot be controlled by a single entity--not even by the owner of the MySQL assets. The users of MySQL exert a more powerful influence in the market than the owner does.

Many expected Oracle to harm MySQL as far back as 2005, when they acquired the InnoDB storage engine that plays a crucial role for many MySQL customers. And yet Oracle increased their investment in InnoDB since that time, making MySQL a stronger player in the market.

For further detail on my views on Oracle's intent, please see this interview with me in Forbes Magazine in April 2009.

It may at first blush seem counterintuitive that control of the MySQL assets does not automatically bestow control of the MySQL installed base. But the free installed base of MySQL--enormous on a planetary scale--is voluntarily but not mandatorily coupled to the commercial market of MySQL. It produces huge benefits to the MySQL business, but it is not controlled by it.

Background

The impetus to write this letter comes from my concern with the talented teams of the MySQL business unit and of Sun Microsystems in general. I am also troubled by certain factual distortions about a subject matter that I am intimately familiar with: MySQL and its business model. Open-source business models are complicated and quite different, and it took many years to fully understand and shape the one of MySQL.

A Finnish citizen, I served as chief executive officer of MySQL from early 2001 to February 2008, when Sun acquired MySQL. After that, I served as senior vice president of the database group at Sun until the end of March 2009. Being the only person to have served as the CEO of MySQL and to have attended every board meeting ever held, I believe I have unique insights into these matters.

To be clear, I resigned from my position in March 2009, and I presently have no commercial or financial interests in the MySQL ecosystem, Sun, or Oracle (or any other vendor in the DBMS market, for that matter), other than my loyalty to Sun employees in general and the MySQL team in particular.

MySQL's Markets and Installed Base

MySQL is the world's most popular open-source relational database, and potentially the most popular relational database of all. It has an enormous influence and impact on the usage and the buying patterns of relational databases (also known as RDBMSs), in particular for Web applications. One might even state that the Internet would not be what it is today, were it not for MySQL. Staffed by a highly talented team of passionate employees, the Swedish company MySQL grew the MySQL business from a small one in 2001 to a massive one in 2008.

In this discussion, the term "MySQL" refers to two things. On the one hand, there is the huge phenomenon MySQL--an estimated 12 million active installations under a free and open-source software license, millions, if not tens of millions, of skilled users and developers, and tens of thousands of corporations who use MySQL one way or the other.

On the other hand, there is the business of MySQL, which is growing rapidly, thus rewarding the owners of the assets (currently Sun Microsystems).

Those two meanings of the term "MySQL" stand in a close mutually beneficial interaction with each other. But most importantly, this interaction is voluntary and cannot be directly controlled by the vendor.

What I mean is that the vast and free installed base of MySQL is using it of their own free choice, unencumbered by the vendor and under no obligation or restraint. That is the nature of open source. And conversely, the MySQL business is supporting the free installed base of MySQL (by improving the product) voluntarily and in the hope of deriving benefit from the installed base.

This is the paradox of an open-source business, and it took me a long time to truly understand how powerful a force it is. It is unlike any traditional business. The key point is that both the users and the vendors of open source are engaged in a powerful free-market dynamic that cannot be contained by any single entity.

It is in everybody's interest that the two sides of MySQL produce benefit for and derive benefit from each other. But neither group can mandate or control the other one. This is a core philosophy of open-source software and more generally of the "architecture of participation" (as defined by Tim O'Reilly). There is a mutually beneficial voluntary relationship, but there is no control by one group over the other. In more colloquial terms: the owners of MySQL cannot force MySQL users to pay up, and the nonpaying users cannot force the business to subsidize them.

Anyone acquiring the MySQL assets will therefore acquire an ability to control the business aspect, i.e., meaning how MySQL is licensed commercially, but only an opportunity (and no free reign) to derive benefit from the free user base.

This explains how the MySQL business can be valued highly in the market ($1 billion, when acquired by Sun in February 2008) while at the same time providing no way of controlling its installed base. This unusual relationship between market share and installed base is at the core of the topic. The market share is small but controllable, to some degree. The installed base is enormous but not controllable. The installed base is, and can be, hugely beneficial to the owner of MySQL, but only to the extent and for as long as this owner of MySQL enjoys the trust of the installed base.

To put it in numbers, it may be useful to see the usage of MySQL, as divided into three categories:

MySQL is in safe hands with Oracle, at least according to CEO Larry Ellison.

At an industry gathering in Silicon Valley Monday, the Oracle chief spoke about the legal clouds hovering over the Sun-Oracle deal. Although Sun is losing $100 million a month due to the delay in consummating the merger, he insisted that Oracle will not spin off MySQL just to win approval from the EU.

Interviewed at a Churchill Club event by former Sun and Motorola chief Ed Zander, Ellison maintained that despite EU concerns, Oracle's database does not compete with MySQL.

"MySQL and Oracle do not compete at all," said Ellison. "If you look at where we compete it's with DB2, Microsoft's SQL Server, Sybase, and a long list of others. We never compete against mySQL, it addresses very different markets."

Ellison pointed out that the U.S. Justice Department has already okayed the merger as pro-competition and that once the EU does its job, it will come to the same conclusion. He expressed the need to complete the deal quickly to keep Sun going and to save as many jobs as possible. "The longer this takes, the more money Sun is going to lose," said the CEO.

Ellison also addressed concerns that Oracle might jettison Sun's hardware business.

"We are keeping everything," said Ellison. "We're keeping tape. We're keeping storage. We're keeping x86 technology and SPARC technology--and we're going to increase the investment in it. Sun has fantastic technology. We think it's got great microprocessor technology--it needs a little more investment, but we think it can be extremely competitive."

The Oracle chief laid out his plans for the future of a combined Sun-Oracle. He sees the new entity as not a hardware or software vendor, but as a systems company. As a leading example to follow, he cited the old IBM.

"I would like us to be the successor to IBM," he said. "Not Gerstner's IBM. Not Palmisano's IBM. But when IBM was the dominant software company in the world and translated that to being the dominant systems company."

Now Ellison believes he can successfully compete with IBM. "We think with the combination of Sun technology and Oracle technology we can succeed and beat IBM," he said, "That's our goal."

Ellison also countered the claim that HP and IBM have taken advantage of the regulatory confusion to steal customers from Sun.

"IBM said it's got 250 customers from Sun," Ellison said. "What does that mean? I don't think there's a single example of any customer who replaced all their Sun machines with IBM. Solaris is way better than AIX, and Sun machines are faster than IBM's and they cost less."

How much longer will Ellison extend his 32-year career at the helm of the company he co-founded? "I'll go for five more years and see how it's going," he said.

The $7.4 billion Sun-Oracle merger has been in a holding pattern since the EU opened an in-depth investigation earlier this month. The EU has given itself a deadline of mid-January to render a final decision, potentially putting the deal months behind its original closing date of mid August.

The European Commission's decision to further probe Oracle's acquisition of Sun Microsystems has raised both questions and speculation.

Oracle said in April that it would acquire Sun, a server maker and software company whose assets include the open-source MySQL database. The deal has been approved by the U.S. Justice Department and by Sun's shareholders.

But the European Commission, the regulatory arm of the European Union, announced last week that it was opening an in-depth investigation into the $7.4 billion planned takeover, saying that a preliminary probe raised the specter of threats to competition in the database market. Oracle's enterprise software lineup includes the company's proprietary database applications.

The Commission has until January 19, 2010, to make a final decision on the Oracle-Sun deal.

But are the EU's regulators really concerned about the open-source future of MySQL? Or is there a larger agenda at play here?

Certainly, the in-depth investigation didn't come as a shock, says Gartner database analyst Donald Feinberg. "Nobody was surprised that this happened because this is coming from the organization that slapped Intel with a big fine and that went after Microsoft with a vengeance."

I recently spoke by phone, in separate conversations, with Feinberg and his Gartner colleague George Weiss to get their views on the Commission's action. This condensed Q&A folds together their responses.

Q: Since the EU/EC said they were further investigating the Sun-Oracle deal, there's been speculation as far as their motives. One of the EC's stated reasons is they're concerned that once Oracle has control of MySQL, there may be less incentive to further develop the product. Do you see that as the EC's motive, or do think there's more to the picture?
Feinberg: I think their statement that they're expanding their investigation proves that not only don't they understand anything about open-source software, but it proves beyond a shadow of a doubt that there's another agenda. If Oracle did what you just said--let's say they took the product, put it on the shelf, and didn't develop another line of code for it, Monty and Maria DB would become the new MySQL overnight. That's what open-source software is about. It has nothing to do with MySQL and everything to do with the fact that an open-source software product can fork anytime. If Oracle did nothing with the product or tried to destroy it, they would not be successful. You're talking about a product that has momentum in the marketplace. Now the problem is measuring that momentum in the marketplace. But the fact of the matter is they cannot destroy the product.

Q: And this is simply by virtue of the fact that it's open source?
Feinberg: Exactly. If Oracle decided to stop developing the Oracle DBMS, that would be the end of it because nobody else has the source code. Nobody else could do it. But the beauty of an open-source project is it's open source. Anybody can take it and move in the direction they want to move in. If you want to have an open-source product like MySQL, and Oracle is not going to nurture it and develop it and enhance it, then it will fork off and go somewhere else. So the whole premise the EC has, that Oracle could damage MySQL under the assumption that it's the leader in open-source DBMS, is wrong. Oracle will not do that. That would be a really stupid move, and Oracle's not stupid. Clearly the EC is using that for their agenda to look for ways to stop this deal. They're looking for ways to stop this deal because of other European companies who are putting pressure on the EC. The Commission is doing this on the part of the EU, and everybody else out there, including IBM and [Hewlett-Packard].

Q: What is the motivation for the EC itself?
Weiss: We have a pretty common position in Gartner that there is either a misunderstanding or lack of knowledge on the part of the EC where it feels open source can be used as a competitive threat in the market. ... That commission is there to protect the European vendors and opportunities for European common market members. There are vendors with databases that would find Oracle an intimidating presence and may be competing with Oracle not only on the database level but also on the applications level.

Feinberg: It's a political agenda. And although it's pretty strong, for a lack of better term it is the re-emergence of protectionism by a governing body of some organization. The EU is looking for how it can protect the companies in Europe.

Q: Can you give some examples of the companies in Europe?
Feinberg: SAP. Bull. Software AG. Fujitsu is Japanese, but it's big in Europe. There are many European companies that will get stiffer [competition] if Sun is invigorated, which is what would happen if Oracle buys them. Any hardware vendor that competes with Sun today is going to have a tougher time in the future, and the EU is trying to manage that, and they're wrong because that's not their job.

Q: How does the EC gather information or advice to make technology decisions like this?
Feinberg: Honestly, I don't know. You're talking about MySQL, whose revenues are about 0.4 percent of the DBMS market, and there is no other valid measure. Downloads are not a valid measure. The majority of the downloads of MySQL are done at the university and college level by students who use it every day. You can't take downloads and extrapolate that to people using the product commercially. The only measure that is accurate and valid is revenue from support. Now I will grant you that there are a lot of people using it without buying support. So that number, 0.4 percent, is incomplete. However, change it to an order of magnitude of difference, let's say, 4 percent of the market. It's still nothing. The market today is $18 billion that we're comparing this to.

Q: What about the comment from the EC that they see Oracle's databases and MySQL on a fairly even keel as if one competes with the other in the same market?
Feinberg: Not close. Oracle's more in the back office. Data warehousing. MySQL is a minuscule use of data warehousing. Oracle is one of the major vendors. So in data warehousing, they don't compete. In transactions systems, they don't compete. The only place where they overlap is in some of the non-mission-critical applications and in the Web-enabled applications where MySQL is much stronger than Oracle. By the way, my understanding is that part of the reason for these unfair-competition laws is a fear of lack of innovation. If somebody has a monopoly, they don't have to innovate. They can just collect money. Oracle released 11g R2 last Tuesday, the new release of their DBMS, and it's loaded with new functions, some of which are pretty major. So the argument about no new innovation goes away completely. The question that should be asked is not if MySQL gives them an unfair advantage in the market, but does it change the competition between Oracle and IBM, Oracle and Microsoft, Oracle and Sybase? It doesn't affect any of that. I'm not going to say that MySQL isn't going to take away some IBM, some Microsoft, and some Sybase low-end applications. But it doesn't change the major competition in the market for this stuff at all.

Q: Whatever the EC decides about this merger, MySQL is still out there. Wouldn't it pose a competitive threat either way?
Weiss: The only thing the EC may think about is "What if all the users of MySQL are suddenly invaded by an Oracle salesperson who says pay up?" Let's say Oracle creates certain anticompetitive practices in which they try to corral all of these millions of users on the MySQL database to be Oracle customers. Through open source, the only thing you pay for is the subscription support that you either want or don't want, regardless of what Oracle would like you to do. That's why you rarely see a very large monetized open-source vendor in the marketplace. Red Hat may be one of the largest. Maybe Sun could have been considered the largest because they have Open Solaris and Open Office. But in general, vendors have not been able to monetize open source into a billion-dollar business. If Sun couldn't do it, I don't know if Oracle could just because they happen to own another DBMS and then can create a multibillion-dollar business out of this at the expense of European markets.

Q: We've been hearing that IBM and HP have been using the confusion and uncertainty (about the eventual outcome of the planned Oracle-Sun merger) to their advantage. Have you been hearing the same?
Feinberg: Oh yes, absolutely, and not just IBM and HP. But all the hardware vendors that compete with Sun are trying to get Sun users to switch from their hardware platforms on the basis of the turmoil and uncertainty. I don't think it's a valid argument personally, but it's a good marketing technique. Part of the premise is that Sun is losing money like crazy. They had negative 40 percent growth last quarter. There's no question in my mind that this is going to affect that and make it worse. And at some point Oracle has to ask the question, do they still want to buy the company?

Q: Can they still back out at this point?
Feinberg: I don't know the terms of the agreement. It might cost them some money to back out. But of course, Oracle can back out. What happens if Oracle backs out is that Sun's in big trouble. ... With the negative growth they've had, with the uncertainty in the market, with the lack of confidence in Sun, if Oracle backs out of the deal, Sun's left hanging with nothing. So I think it would be devastating to Sun. And who would benefit? All the hardware companies out there, including the European hardware companies.

Q: When the EC says it's conducting an in-depth investigation, what further information can they gather that they don't already have?
Weiss: I don't know because anything that could have been documented out of the DOJ as far as due diligence could have been made available to them. There's lots of information with regard to the different forks that have occurred in MySQL. The only thing that remains is to aggregate this information and understand the working processes and business models that go on in open source and specifically in MySQL. It really would not take a whole lot of technical information; it would be more a business model understanding of how open source works.

Q: Is there anything Oracle can do or say to the EC in a situation like this?
Feinberg: The only thing that Oracle can say is: "Look at our track record. We bought InnoDB. It's an open source product. At the time it was used under a majority of MySQL installations and it still is. If we were doing something wrong with that product, people would stop using it." In fact, Oracle's enhancing it. They have not raised the price in the commercial end of it, and they're giving great support. They also bought a company called Sleepycat a couple years ago and acquired a DBMS called Berkeley DB, which is an open-source product. It's still sold by Oracle. It's enhanced by Oracle, and the customers are being supported by Oracle. So Oracle has bought two open-source products in the DBMS space and has not hurt either of them, but has in fact enhanced them. I suspect that most of the PeopleSoft people out there are getting great customer support today. Look at Oracle's track record of supporting their acquisitions going back to their first major acquisition. They bought a DBMS called RDB from DEC back in the early '90s. They still have people using RDB, and Oracle is still supporting it. It's not open source, but they didn't get rid of the product and didn't hurt the users.

Q: Do you think the EC is going to drag this out to the very end?
Feinberg: The only way they won't drag it out to the very end is if they yield to the market pressure, which they've got to be getting. I would suspect even Sun customers out there would like to see it done soon. So there's got to be market pressure for them to get it done earlier, and unless they yield to that, I think they will drag it right out as long as they possibly can. I don't think we'll see a solution to this until January or February. The only exception being if Oracle backs out, which they would probably do sooner rather than later.

Q: Do you think Oracle will stick it out?
Feinberg: My opinion is yes, I think they will. But again, you're giving into the political side of it, which is hard to predict. You have to ask yourself if Larry Ellison and Charles Phillips (Oracle's CEO and co-president, respectively) just get so fed up with this whole thing that they throw their arms up in the air and say it's not worth it. I would suspect the frustrations have to be running pretty high inside Oracle right now.

Q: If the EC doesn't approve this merger, what would mean for Sun and for Oracle?
Weiss: One scenario is that Oracle walks away from the deal. If MySQL is forced to be divested, or the EC exacts a certain toll from Oracle in penalties for monopolistic positions, Oracle will probably walk away. Sun is then thrust back again on its own looking for a suitor. We know Sun had suitors prior to Oracle. But it's unlikely anybody's going to help Sun out and acquire them like Oracle. That puts some difficult decisions for users on what to do if Oracle cuts Sun loose. Many of them are skeptical about what Oracle will do with Sun anyway. My sense from talking to the users of Sun equipment is that every day is burning a hole in their pockets in their willingness to purchase more Sun equipment. The longer it's postponed, the longer the users have to wonder whether this deal will go through and what the European Commission is going to do with the decision.

Oracle has much to say to Sun Microsystems customers in a front-page advertisement it placed in Thursday's European edition of The Wall Street Journal.

The advertisement commits to greater investments in Sun hardware and Solaris software, but has absolutely nothing to say about MySQL. Is this a necessary omission to appease European regulators, or is it a sign of Oracle's intentions?

In the advertisement, Oracle commits to the following:

(Credit: Oracle)

IBM, which has been cleaning up at Sun's expense, gets a warning from Oracle CEO Larry Ellison: "We're in it to win it. IBM, we're looking forward to competing with you in the hardware business."

Sun's business has tanked in the ongoing uncertainty over Oracle's takeover bid. The advertisement is clearly intended to placate customers that might otherwise flee to the apparent security of a relationship with IBM or Hewlett-Packard.

It's interesting, therefore, that Oracle gives no assurances about MySQL. This could simply be a politic action designed to sidestep the ire of the European Union, which has been investigating the effects an Oracle acquisition might have on Sun's MySQL business.

Or it could simply be a recognition that assuaging the fears of MySQL's customers is a comparatively unimportant task. MySQL was doing roughly $100 million in sales at the time Sun acquired the company. Given that Sun stands to lose billions in its hardware business the longer the Oracle bid drags on, losing a few tens of millions from MySQL is pocket change.

Besides, it's not at all clear that Oracle's decision to snag Sun has done anything to slow MySQL adoption. A vocal minority within the open-source development community has wrung its hands over the deal, but I've yet to hear MySQL's customer base, which skews toward the technology-savvy Web crowd, fretting about Oracle's impact on MySQL's business.

Oracle's advertisement is designed to shore up confidence in the CIO crowd that still buys Sun and probably has no clue that their organizations are running MySQL throughout the enterprise. At some point they'll know. But by that time, Oracle's acquisition of Sun should be complete.

Follow me on Twitter @mjasay.

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.