March 3, 2004 4:14 AM PST
SAP takes Oracle's side in DOJ battle
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"I think the Department of Justice ruling is misplaced," SAP executive board member Shai Agassi said in an interview Tuesday.
Agassi said he takes issue with the agency?s view of the market as outlined in the suit it filed last week. The suit contends that Oracle's $9.4 billion takeover of PeopleSoft would leave just two competitors--SAP and Oracle--in the market for application software designed to streamline corporate accounting and human resources tasks for large companies. In such a narrow field of competition, prices would rise and innovation would fall, the suit states.
Agassi said the line between software suppliers like SAP that cater to the largest corporations in the world and those that serve midsize companies, including Microsoft, is a fuzzy one. "It's like the border between water and oil," he said. "You shake it a little bit and it changes."
Although Microsoft is fairly new to the business applications market and sells its wares largely to companies with less than $1 billion in annual revenue, it should not be discounted as a competitor, Agassi said. SAP and Microsoft have begun to compete for the business of midsize companies--a segment the Justice Department excluded from its definition of the market.
Agassi's stance on the antitrust suit--arguing in favor of allowing Oracle to acquire PeopleSoft-?makes sense from a competitive standpoint.
SAP stands to gain from the confusion created by a drawn out conflict between rivals, pundits have said. And the German software maker could become a safe haven for information technology buyers uncertain about the future of PeopleSoft and ambivalent about a distracted Oracle, the thinking goes.
A speech delivered by SAP co-founder Hasso Plattner last June shed additional light on the matter. Plattner appeared to almost welcome the prospect of a merger between his two closest rivals. It would give SAP an opportunity to recruit some customers unhappy about the change in PeopleSoft's ownership, analysts said.
In addition, SAP enjoys a wide lead in market share over both Oracle and PeopleSoft in the applications business. "That's why we don't care" that much about the Justice Department suit, Agassi said.
Still, SAP's comments may serve to buttress Oracle's case against the Justice Department, particularly because it echoes the sentiments of some industry analysts who have questioned much of the rationale behind the agency's suit. In particular, those analysts fault the Justice Department's dismissal of Microsoft as a factor in the market.
Agassi's comments add to the surreal dimension of Oracle's prolonged fight to acquire PeopleSoft and, more recently, its effort to challenge the Justice Department's suit. Charles Phillips, an Oracle co-president, said earlier this week that buying PeopleSoft would give Oracle the scale it needs to take on SAP more effectively. Furthermore, SAP executives have been loath to acknowledge Microsoft, a longtime partner, as a competitor.
While SAP and Oracle make strange bedfellows, the revelation this earlier this week that Oracle is seeking information from Microsoft in its case against the Justice Department's antitrust suit is even stranger.
Oracle Chief Executive Larry Ellison was among the most outspoken critics of Microsoft during the Redmond, Wash., company's own antitrust trial, which was instigated by the same agency now blocking Oracle's expansion plans.