Even for a company as powerful as Intel, with $13 billion in cash on the books, $1.25 billion is a lot of money. So why drop that huge quantity of money in the lap of its biggest rival, Advanced Micro Devices?
The payment is, of course, to settle the antitrust suit AMD brought against Intel five years ago. AMD's stock surged 22 percent Thursday after the chipmakers announced the agreement, but Intel's share price dropped 1 percent, indicating which company the investors thought got the better deal.
Paul Otellini, speaking in September and holding a wafer of silicon chips
(Credit: Stephen Shankland/CNET)AMD does indeed come away with some serious perks--not just the cash, but also a new patent cross-license agreement that removes Intel's objections to AMD spinning off its chip-manufacturing business, enables multiple manufacturers to build AMD's chips, and eliminates the earlier patent agreement's payments to Intel. And it has Intel's agreement not to violate a list of restraints on its business practices.
But Intel gets something out of this, too.
Spend now, save later
Let's start with the money. Sure, shareholders likely frowned when they heard Intel's fourth-quarter expenses are expected to climb from $2.9 billion to about $4.2 billion. But Intel could have been out a lot more money if things had gone south.
In the European Union, Intel is wrestling with an antitrust case that produced a fine of 1.06 billion euros, or $1.6 billion at today's exchange rate. Intel appealed the European Commission fine, but it's a very concrete example of just how severe the Intel punishment could be.
There are other financial factors, too. Intel and AMD were set to begin their jury trial in March, and jury trials are famously unpredictable. Add on top of that risk the fact that antitrust suits can come with triple damages.
"It was a small multiple of the damage that could be awarded in a jury trial," Intel Chief Executive Paul Otellini said of the price tag in a conference call earlier Thursday.
Treble damages of the scale of just the European Commission fine would have been more than $4 billion, Technology Business Research analyst John Spooner observed. Facing that prospect, "Intel chose to control its own destiny and settle up front."
Taking commercial cases to a jury trial is indeed risky, said Richard Brosnick, who's involved in antitrust law at the firm of Butzel Long.
"Any complex commercial case going to the jury phase is challenging, and antitrust, given the economics, is probably more challenging," Brosnick said. "Trial is expensive overall, not in billions, but in terms of the risk you'll be able to explain these issues in a way that will be understood by and persuasive to a jury."
Goodwill in other antitrust cases
AMD's antitrust case isn't the only one Intel faces. It's also got the European Commission fine discussions, a new antitrust lawsuit from New York Attorney General Andrew Cuomo, and an antitrust investigation from the Federal Trade Commission.
The AMD settlement doesn't make those cases evaporate, but Intel hopes it'll help.
"We hope that having this major litigation settled with AMD would be viewed favorably by these regulatory bodies and eventually the cases would be dropped," Intel spokesman Tom Beerman said.
Certainly those regulators won't face as much of AMD's active prodding. Among the terms of the settlement is this, regarding all the regulatory actions AMD is involved in:
AMD agrees to promptly...notify in writing each authority...that except as provided in Section 3.5 AMD has resolved its disagreements with and complaints concerning Intel contained in that Administrative Complaint and believes that this Agreement provides AMD with fair compensation for any and all actual or alleged harm and damages that AMD did or may have suffered in connection with matters discussed in the Administrative Complaint. In addition, AMD agrees that it will not ghost-write or edit any other briefs, pleadings, or "friend of the court" or "friend of the tribunal" materials or briefs in any Administrative Action.
But whether Intel will actually get what it wants isn't certain.
"It's certainly possible that the public agencies will view this as a compromise they can live with, but it's equally possible not," Brosnick said.
One issue is Intel practices described in the section 3.5 mentioned above, where AMD and Intel still disagree. Brosnick said the governmental agencies still might be concerned about any of those practices--called "retroactive discounts," "accused bid bucket," and "accused end-user discounts" in the settlement.
Intel digging in its heels?
Though the agreement didn't preclude those practices as it did some others, it did agree not to defend them as hard as it might in settlement talks with the government organizations.
"Intel agrees that in the event it enters into voluntary settlement discussions with a government authority in the EC litigation, New York litigation, or the FTC investigation, and if such government authority proposes to include in a consent judgment or other governmental order a prohibition against Retroactive Discounts, Accused Bid Buckets or Accused End-User Discounts, Intel will not challenge such a prohibition as a general matter, although it may challenge the scope or specific language of the prohibition," the settlement agreement said.
Just how deeply Intel will dig in its heels in the other cases remains to be seen. Although it settled a big case, Otellini hardly sounded contrite. He reiterated on several occasions his belief that Intel didn't do anything illegal. He said airing the full context of seemingly incriminating e-mail would show Intel in a better light. And he vehemently attacked the New York case.
"We strongly disagree with the New York attorney general case and believe the complaint is entirely without merit," Otellini said. "Discounts and rebates are entirely fair business practices, and it's unfortunate the New York attorney general chose to distort the facts. We would have preferred to engage in a dialog with the New York attorney general."
Then again, Intel spoke in strong terms about the AMD trial. Perhaps Intel's pragmatic side will show in the other cases next.
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."
New York Attorney General Andrew M. Cuomo filed a federal antitrust lawsuit Wednesday against Intel that accuses it of paying computer makers rebates to illegally maintain its monopoly power, the newest among several such attacks that have dogged the chipmaker in recent years.
"Intel has engaged in a systematic worldwide campaign of illegal, exclusionary conduct to maintain its monopoly power and prices in the market for x86 microprocessors," the suit asserts. "By exacting exclusive or near-exclusive agreements from large computer makers in exchange for payments totaling billions of dollars, and threatening retaliation against any company that did not heed its wishes, Intel robbed its competitors of the opportunity to challenge Intel's dominance in key segments of the market. This illegal behavior was highly detrimental to consumers, competition, and innovation."
The suit "seeks to bar further anticompetitive acts by Intel, restore lost competition, recover monetary damages suffered by New York governmental entities and consumers, and collect penalties," Cuomo said in a statement.
The suit (click for PDF) makes the state the newest party to go after the dominant chipmaker. Intel also is in the midst of an antitrust suit brought by top rival AMD in 2005 and appealing a massive $1.5 billion fine from the European Commission from a later case in the European Union.
New York Attorney General Andrew M. Cuomo
(Credit: New York Office of the Attorney General)Intel will defend itself, Intel spokesman Chuck Mulloy said in response to the New York suit.
"We disagree with the New York attorney general. Neither consumers--who have consistently benefited from lower prices and increased innovation--nor justice are being served by the decision to file this case now," Mulloy said.
Of e-mails the attorney general quoted as evidence Intel abused its position, all already emerged in earlier cases, he added. "It is the AMD case filed 4.5 years ago. It's the same case the EU brought. There's nothing significant or new here that hasn't been discovered," Mulloy said.
According to the suit, computer makers "frequently decided, when faced with the array of incentives and threats which Intel brought to bear, to collaborate with Intel in restricting their purchases from AMD."
"In a February 27, 2003 internal Dell document, for example, it was assumed that 'aggressive' purchases by Dell from AMD could result in '(r)etaliatory (rebate) reductions (by Intel that) could be severe and prolonged with impact to all LOBs (lines of business),'" the suit said. "Another Dell document from March 2003 concluded that '(a)nticipated Intel response wipes out all potential opinc (operating income) upside from going with AMD.'"
And an unnamed IBM executive said in a 2005 e-mail that balancing business interests against Intel's response was hard. From the suit:
I understand the point about the accounts wanting a full AMD portfolio. The question is can we afford to accept the wrath of Intel if we do the AMD full portfolio? It is a very hard question to deal with. On the one hand, having Intel help us has been one element of why we are doing better in the market. If they start to sell against us again I am afraid that we would be in a very difficult spot. On the other hand, if we leave Sun and HP an opening with AMD we will (be) very exposed on that side of things.
Cuomo's office said it began investigating the case in January 2008, "reviewed millions of pages of documents and e-mails and took testimony from several dozen witnesses."
Updated 9:43 a.m. PST with further details from the lawsuit.
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.
MySQL co-founder Michael "Monty" Widenius is leading a chorus of voices expressing growing apprehension over the proposed Oracle-Sun merger.
In a statement posted on his blog on Monday, Widenius said the European Commission is "absolutely right to be concerned" about the $7.4 billion takeover of Sun by Oracle, and he urged Oracle to sell MySQL to clear up any antitrust issues.
Although the deal received the thumbs-up from the U.S. Department of Justice in August, the Commission opened a probe in early September, citing fear that Oracle's ownership of MySQL could pose a competitive threat.
In his blog, Widenius asked Oracle "to be constructive and commit to sell MySQL to a suitable third party, enabling an instant solution instead of letting Sun suffer much longer." The famed MySQL developer, who departed Sun earlier this year, said that he wishes Sun "all the best, but MySQL needs a different home than Oracle, a home where there will be no conflicts of interest concerning how, or if, MySQL should be developed further."
Another voice uneasy about the Oracle-Sun venture is Florian Mueller, an EU policy expert who is a former MySQL shareholder and adviser. Mueller had helped Widenius' new company, Monty Program, urge the EU to investigate the anticompetitive effects of a MySQL owned by Oracle.
"Letting Oracle have MySQL is worse than putting the fox in charge of the henhouse, because the hens are no threat to the fox, while MySQL makes Oracle lose customers and forces it to grant discounts to customers threatening to defect," Mueller said in a statement.
Monty Widenius
(Credit: MySQL/Sun Microsystems)"Every day that passes without Oracle excluding MySQL from the deal is further evidence that Oracle just wants to get rid of its open-source challenger, and that the EU's investigation is needed to safeguard innovation and customer choice," Mueller added. "This is highly critical because the entire knowledge-based economy is built on databases."
Though several analysts have questioned the EC's motivation for probing the deal, Mueller firmly backs the commission.
"It's inappropriately arrogant for some interested parties to suggest that the EC has yet to understand the case," he said. "The EC is really doing a great job under huge time pressure." In August, Mueller helped write a position paper (PDF) on MySQL that Widenius' Monty Program gave to the EC.
And in yet another condemnation, Richard Stallman, founder of the free-software movement, wrote an open letter to the EU on Monday opposing an Oracle-owned MySQL as a threat that would hinder its further development in the open-source community.
Other prominent names, though, disagree. Earlier this month, MySQL ex-CEO Marten Mickos urged the EU to OK the deal, arguing that by delaying the merger, the EU is hurting the very competitive atmosphere that it claims to want to protect.
Major database players, including HP and IBM, have already reportedly taken advantage of the delay to win over customers from Sun.
In the meantime, Sun continues its downward spiral. Late Tuesday, the company confirmed that it would lay off another 3,000 employees, about 10 percent of its total workforce, over the next year. This latest round is in addition to 6,000 jobs cuts announced almost a year ago as part of the company's restructuring plan.
On Oracle's part, CEO Larry Ellison said last month that despite the EU's probe, Oracle has no intention of spinning off MySQL.
Clarification at 9:35 a.m. PDT: Widenius is a co-founder of MySQL, the company.
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.
Microsoft's top lawyer said that a tentative agreement with Brussels announced earlier Wednesday could potentially allow the software maker to move out of the regulatory crosshairs, perhaps paving the way for regulators to shift their attention elsewhere.
"It's important for us to get closure in Europe on issues that have obviously been controversial for over a decade," General Counsel Brad Smith said in an interview. "Today's decision takes us an important step closer to doing that."
Smith
(Credit: Microsoft)Microsoft initially took a much different approach to the European Commission's assertion that the inclusion of a browser in Windows violated antitrust law. The company had initially proposed just stripping out the browser from Windows 7 entirely, leaving users the prospect of trying to get a browser on their own. The software maker eventually backed down after indications that that approach was unlikely to fly.
While not final, Microsoft's moves would appear to resolve all of its outstanding regulatory issues with the Commission and were greeted warmly by regulators on Wednesday.
Although most of the early attention focused on the agreement around a browser "ballot screen," Microsoft also announced on Wednesday an agreement around product interoperability. Under that deal, a 10-year commitment by Microsoft, the software maker agrees to publish communication protocols and adopt certain standards as part of Windows, Windows Server, Office and other high market share products. Companies could also purchase for 5,000 euros a warranty that would subject Microsoft to court oversight and monetary penalties if it doesn't live up to its commitments.
Smith said that the approach Microsoft took with regard to interoperability was designed to adopt methods that Nellie Kroes, commissioner for competition, had outlined in a speech last year for how companies with high market share products should behave.
"I actually think this in effect implements the model that the Commission has been advocating," Smith said. Moreover, he said it is a model that other software companies should pay attention to, he said, noting that there are lots of companies that have high market share. He noted that Google has 78 percent of the paid search market and IBM has 100 percent of the mainframe market, while Adobe also has dominant positions in certain areas, such as Photoshop.
"It is important we believe to create a level legal and regulatory playing field," Smith said. "Everyone that has a high market share needs to respect the same set of rules. I think a number of these rules are likely to be applicable to other companies and other products."
Settling now with Brussels also could help Microsoft in its effort to win approval for its search deal with Yahoo, Smith said.
"This certainly isn't going to hurt when it comes to the Yahoo-Microsoft agreement," he said. "It's not necessarily going to make a huge difference. We didn't feel a particular step was needed to help it along."
Microsoft is in the process of trying to ascertain whether the deal needs approval from Brussels or from individual European antitrust authorities. It also needs approval from U.S. regulators, who have asked for more information on the deal.
Mozilla and Opera are both unhappy with Microsoft's proposed "ballot screen" to let Windows users in Europe select their default browser, according to a report in The Wall Street Journal.
Microsoft's proposed browser ballot screen is its attempt to satisfy the antitrust investigation from the European Union over Internet Explorer's dominance in Windows. The screen would present the user with a menu to install other browsers, including Firefox, Opera, Google Chrome, and Safari, and let the user pick one as the default.
Microsoft became open to the concept over the summer as an alternative to removing IE from Windows for the European market.
At the time, the idea appealed to Opera CEO Hakon Wium Lie, who declared, "It's a happy day for us. We certainly think the ballot is good news and think it will give users a genuine choice." But Mozilla Corp. CEO John Lilly adopted a more wait-and-see approach, saying he wanted to see the specifics before reacting.
EU officials asked rival browser makers among others for their input on Microsoft's proposal, sending them questionnaires over the summer, according to the report.
After checking out the ballot screen and the proposal from Microsoft, the European Union for Interoperable Systems (ECIS), which includes Opera Software ASA as one of its members, said it presents too many hurdles for the average user.
According to Sunday's Wall Street Journal (subscription required), ECIS and Opera attorney Thomas Vinje said that selecting another browser requires "the user to confirm and answer threatening and confusing warnings and questions. Microsoft has cunningly found a way to accept the Commission's suggestion of a ballot screen, but to do so in a way that will be entirely ineffective."
In response to an e-mail from CNET, Vinje said that Microsoft's current ballot screen falls short of having any effect on competition since it fails to offer users a seamless and unbiased choice of browser. However, he felt the problem could be fixed with some trivial changes.
He said that despite choosing an alternate browser through the ballot, Internet Explorer would remain turned on and that only an additional procedure would allow the user to deactivate IE. So the ballot screen is simply installing another browser in addition to IE rather than offering users a choice of a single browser.
Adding an alternative browser is unnecessarily complex, according to Vinje. The ballot screen, set up as a Web page in IE, requires many unnecessary clicks, displays threatening warnings, and poses confusing questions before another browser can be downloaded and set up. He believes users will be discouraged from selecting an alternative browser.
The ECIS feels that a powerful, yet trivial change to Microsoft's proposal is needed: the ballot screen must be designed to offer users a seamless choice in which a single click for an alternative browser is sufficient to download and install that browser, without warnings or questions, and without leaving Internet Explorer active and visible.
"Choosing an alternative browser must not be more cumbersome than choosing Internet Explorer," said Vinje, "which can only be accomplished in a real ballot screen application--not in a Web page."
Countering with suggestions
Mozilla has said that a ballot screen is a good step, but as currently proposed, it's not good enough. A blog written August 18 by Mozilla's general counsel, Harvey Anderson, examined Microsoft's specific language and functionality in the ballot screen proposals. Anderson addressed several concerns and countered with his own suggestions.
Anderson praised Microsoft's effort to not include links or shortcuts to IE inside Office 2007 but said it should be expanded to include all Microsoft software. "If Microsoft applications need to launch a browser, they should only launch the user's default browser," he wrote. "The proposal should be modified such that this provision applies to all Microsoft desktop software, and certainly to the already announced Office 2010."
Anderson also expressed concerns about the ballot screen itself, saying IE could automatically become the default browser in a number of scenarios. It could end up as the default if the user ignores the ballot or can't figure out how to use it. It could also wind up the default if the user runs into problems trying to install one of the other browsers. But in this case, his only suggestion was that the ballot require the user to make a choice.
Finally, Anderson said that the ballot doesn't educate the user as to what a Web browser is or how each browser differs. "The ballot should introduce the user to at least a simple definition of what a browser is before offering the user a choice in browsers," he wrote. "It should probably go one step further and explain that the different browsers compete for superiority in the areas of ease of use, security, and customizability. "
Other voices have chimed in to criticize the ballot screen. Mitchell Baker, chair of the nonprofit Mozilla Foundation, detailed her concerns in a blog on August 17. Despite the user's ability to choose a different default browser, Baker said she believes IE would still have the upper hand with a prominent position on the Windows desktop and Taskbar.
"Choosing another browser as a 'default' does NOT mean that the other browser takes the place of IE," stated Baker in her blog. "For example, the IE logo ("shortcut") still remains unchanged on the desktop. The shortcut/logo of the browser the user has selected does not replace this, it is added elsewhere. As a result, the familiar location remains IE, not the user's choice."
Baker also expressed concern that the average nontechnical user may have trouble navigating the different screens required to choose a different browser. She said she believes the ballot screen only helps users download alternative browsers and should be designed to help them install, open, and make other browsers the default. "As proposed, we expect to see many people who want other browsers get lost in the process before they actually succeed in making an alternative browser their main browsing tool," she wrote.
The EU had hoped to wrap up this final phase of its investigation into IE, especially since all parties have agreed at least in principal to the idea of a ballot screen. But the competition could stall final approval if Microsoft is forced to wrestle with the finer points of the complaints.
Vinje believes that Microsoft only superficially accepted the EU's suggested remedy and that the ballot screen as designed does not restore competition. He said the EU will be careful to make sure that any proposed solution would be effective. And in this case, the ECIS would be surprised if Microsoft's proposal were accepted without "significant modifications."
On Tuesday, Microsoft spokesman Kevin Kutz said: "In July, we made a new proposal to address EU competition law issues related to Internet Explorer and interoperability. The Commission welcomed our proposal and announced it would assess its effectiveness. We continue to look forward to the next steps in this process."
Requests for comments from Opera and Mozilla were not immediately returned.
Update 12:15 p.m. PDT: Added comments from attorney Thomas Vinje.
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.
Oracle is touting its alliance with Sun.
(Credit: Screenshot by Stephen Shankland/CNET)Oracle isn't letting a pesky EU investigation stand in the way of its planned acquisition of Sun Microsystems.
Larry Ellison, the software giant's chief executive, is joining Sun's server chief, John Fowler, to show off some new Sun hardware running Oracle's software on Tuesday. The companies are touting their "partnership" with a jointly branded "Exadata" system shown in a Webcast invitation sent to press and published by both Oracle and Sun.
"You are invited to attend an exclusive webcast event where Oracle CEO Larry Ellison will unveil an innovative new product, the world's first OLTP (online transaction processing) database machine with Sun's brand new FlashFire technology," the invitation said. "Don't miss this opportunity to learn firsthand how the partnership between Oracle and Sun can benefit your business now and in the future."
Sun has been working on systems that take advantage of solid-state drives (SSDs), which use flash memory to store data rather than traditional hard drives with rotating platters that can store data in tiny magnetic patches. One advantage of such systems is that it's easier to retrieve data scattered in different locations over a drive, which can make reading and writing data faster. However, flash drives cost much more per gigabyte to store data than traditional hard drives.
Notable here is that Oracle is helping preserve the value of the asset it hopes to acquire. As Illuminata analyst Jonathan Eunice observes, Oracle is trying to counteract IBM and Hewlett-Packard programs to steal away Sun customers who might be hesitating over Sun's current limbo and its inevitable future changes.
Oracle is of course a software company, and one of its biggest challenges in acquiring Sun will be embracing hardware as well, even if it's in some subordinate role that mostly serves as a delivery vehicle for the software. Hardware still takes immense resources to design, qualify, test, manufacturer, and support to compete on the level of IBM and HP.
Tuesday's event telegraphs that Oracle does indeed care about Sun's hardware. So do marketing missives proclaiming that Oracle plans to spend more money developing both servers with Sparc processors and Sun's Solaris operating system than Sun does today.
Oracle doubtless is frustrated by the EU's intransigence, which centers on the open-source MySQL database software that competes with Oracle's own core database product. But it's doing the best it can to keep Sun's hardware business alive.
