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(CFOZone) By Ron Fink

Surely it comes as no surprise that the European Union's competition commissioner is playing hardball with Larry Ellison.

After all, I'd argue that the EU singlehandedly thwarted Jack Welch's grand strategy to make GE less dependent on financial services when it stopped its acquisition of Honeywell in 2001.

Ellison may be a tough negotiator, but even he has to recognize that he can't force the EU to back off if it doesn't want to. What's he got going for him that Jack Welch lacked? A better argument may not be enough to change any minds here.

So the question in mine at this point is what he's willing to do to make this work. And it might not be all that much.

True, Oracle would undoubtedly take a loss on MyQSL, the open-source database company that seems to the bone of contention, if he had to divest it. Sun paid $1 billion for MyQSL early last year, and there's no way Oracle could get that much for it under the circumstances.

But what if the EU instead demanded that he stop licensing its commercial use? It's hard to believe that would be a deal-breaker for Ellison, not after wresting Sun away from the clutches of IBM.

When the EU first raised its ugly heard in this deal, Gartner Group analyst Larry Feinberg pointed out that there's no way Oracle could stifle competition in this space. Yet if that's the case, how much is a commercial license worth?

For that reason, I don't get why Feinberg said he expects Ellison to walk away from Sun unless the EU waves the white flag.

Yes, the EU may not understand open source, but surely Ellison knew that going in, and it's hard to believe he wouldn't have seen this coming all along. So I'd be surprised if he didn't offer enough concessions here to get EU approval. After all, Ellison can't want this to end the way Honeywell did.

Comments (2)

	1. 11-09-2009 19:37
	We must also remember that the longer the uncertainty persists about Oracle's commitment to the Sun deal, the more the value of the Sun assets erode as employees and customers jump ship to more predictable technology options (if any truly exist these days). Registered

Fred Kauber

	2. 11-10-2009 08:09
	Reuters is reporting today that the EU is formally against, though it has until January 19 to rule officially, the Sun acquisition of Oracle, stating it would stifle database market competition.  What's most interesting is the the DOJ, which did wave a green flag for the deal earlier this year, seems to be admonishing the EU for its stance. It'll be interesting to see what happens next. Registered

Judy Mottl

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