Is Oracle In The Justice Department's Crosshairs Again?

In May, Christine Varney, the new antitrust chief at the Justice Department, promised to scrutinize high-tech mergers more closely than her Bush-era predecessors. In the early Obama administration, talk of a possible antitrust action has focused almost exclusively on Google. The latest example is this Sunday Times profile of the apple-cheeked Googler whose job it is to furiously spin decision makers on the idea that Google is not really so big after all. But that's not the only antitrust issue lurking. If the recession, the energy bill, the prospects for health care, and a dozen other stories weren't already dominating headlines, yesterday's news that the Justice Department is taking a closer look at Oracle's $7.4-billion purchase of Sun would be a really big deal.
The antitrust arguments against Google are fairly well known (I wrote about them in a Washington context here). The Sun-Oracle dispute isn't nearly as familiar, partly, I suspect, because it doesn't involve "consumer-facing technology" like Google, partly because prominent Oracle execs don't pal around with the president and assume high office in his administration, and partly because there's only so much stuff the average person can keep track of enough to care about. But given Oracle's importance, this story is probably worth more ink and pixels than it's getting.

At issue is the question of competition in the software sphere. Sun is primarily a hardware company, but its Java software competes directly with Oracle's software. If Oracle's acquisition of Sun goes through, Oracle will own Java and be in a position to favor its own technology at Java's expense. The antitrust concern is that the software field might then become too concentrated, limiting competition to the point that Oracle has monopoly power. Yesterday, the Justice Department hit the brakes on the deal by making a "second request" for information, extending its initial investigation. A statement from one of Oracle's attorneys indicates that concern over Java is indeed what Justice is taking a closer look at.

A second request does not mean that Justice will scotch the deal, although it certainly could. Another possible outcome is that it might impose conditions to ensure Java's continuing viability. But there's an interesting backstory here, with all the elements of a classic business-political drama, and I have to believe that under ordinary circumstances it would get a lot more attention. Oracle is a notoriously aggressive company. A few years ago, the Justice Department tried to thwart its $7-billion hostile bid to buy rival PeopleSoft. Oracle won. Java was at the heart of the last major tech-political drama; it played a big part in the Justice Department's antitrust action against Microsoft in the late 1990s. Here a big, aggressive company with lofty ambitions is once again pitted against the Justice Department, which is feeling more aggressive itself. It may not have Google's star wattage, but the Oracle-Sun story should be an interesting one to watch.

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http://www.theatlantic.com/politics/archive/2009/06/is-oracle-in-the-justice-departments-crosshairs-again/20409/