Why Bill Gates is smiling today

Cnet ^ | 02/27/2004 | Charles Cooper

[Therapist]

Bill Gates must be laughing his head off.

Following a months-long investigation, the U.S. Justice Department on Thursday said that it would seek to block Oracle's hostile bid to acquire PeopleSoft, arguing that it would result in higher prices for technology, fewer choices and less innovation.

Setting aside the question of whether Uncle Sam has a case or not, Gates surely must be savoring the moment as Larry Ellison, one of the handmaidens to the Justice Department's antitrust lawsuit against Microsoft, is finally being hoisted on his own petard.

Ellison was one of the most outspoken figures in Silicon Valley egging on government trustbusters to go after Microsoft. The government finally sued Microsoft in May 1998. What's less widely recalled is that the intellectual background for the lawsuit was supplied by a white paper prepared by local attorney Gary Reback at the behest of anonymous complainants. Although nobody has ever stepped forward and taken credit for producing the document, its aims quite neatly fit in with the interests of Oracle and other Silicon Valley rivals of Microsoft.

Why has Ellison pursued Microsoft like Ahab chasing the white whale? When the Justice Department indeed won a preliminary antitrust verdict against the software maker, Ellison's stump speeches included repeated calls to break Microsoft into so-called Baby Bills. Why has Ellison pursued Microsoft like Ahab chasing the white whale? Boiling all this down to a clash of personalities between famously competitive billionaire founders makes for good dish but misses the larger context.

For Oracle, the specter of Microsoft "locking in" users by creating tie-ins between desktop and server operating systems and back office applications, such as Microsoft's SQL Server database, is the nightmare scenario. Ellison watched too many software companies get steamrollered by Microsoft not to watch with a mix of dread and respect.

Although he's never gone around saying this in public, Ellison clearly would like to wield that same kind of power. Simply put, the more developers writing applications that query Oracle databases, the stronger the company's control over the database market.

Here's the other part of the story. Oracle always builds its applications to run exclusively on its own databases. Acquiring PeopleSoft would expand Oracle's share of the business applications market. The deal would also set Oracle up to grab a bigger piece of the database market if all PeopleSoft customers were then required to choose its database.

Ellison clearly would like to wield that same kind of power. Oracle executives swear up and down that that won't happen. But it's clear that the folks in Washington, D.C., don't believe them. I don't either. Over the years, the standard operating procedure at Oracle has been to suck everything into supporting its database.

I suppose Oracle execs are flummoxed by the government's decision to block Ellison's ambitions. They may have a point. If SAP bought PeopleSoft or Oracle, there would be a very good antitrust case to argue. But a merger combining the second and third biggest business applications makers--who then still trail the frontrunner by a wide margin--hardly constitutes the second coming of Ming the Merciless.

That's now all academic. Ellison today finds himself butting heads with an entity even more powerful than Microsoft. Nobody ever accused the federal government and its famous hydra-headed bureaucracy of moving too quickly. The irony is that Ellison may have helped awaken this sleeping giant from its slumber.

[Therapist]

Bill Clinton through his justice department singlehandedly started the tech meltdown when they decided to pursue Bill Gates rather than Osama Bin Laden. Gates' enemy, Larry Ellison, whored himself out in that investigation. Now, the tables are turned as Clinton's snitch is about to come Bush's bitch.

[goldstategop]

Larry Ellison simply wanted to become the Bill Gates Of Database Software.

[anniegetyourgun]

What's bad for the goose is bad for the gander.

[Moose4]

My employer is implementing Peoplesoft accounting products, and I am working on a very arduous project to try and hook our old mainframe-based systems to the shiny new Peoplesoft stuff. So far we've spent almost $20 million over two years and all we have to show for it is a system for tracking our time at work, and a general ledger that doesn't work half the time. I am NOT impressed with Peoplesoft products in general, they seem capable enough but they are incredibly complex and the user interfaces are clunky at best.

And, like a lot of companies, we run our Peoplesoft on Microsoft SQL Server, which is our standard database product for all client/server apps (because our CIO thinks Microsoft can do no wrong even as we constantly fight problems caused by them). If we had to switch to Oracle, we'd have to hire new and expensive Oracle-specialist database administrators and spend hundreds of thousands, or millions, of dollars to make the switch to a database that we don't use anywhere else in the building. It would leave our management that chose this product swinging in the breeze. Not that that's a bad idea in the abstract, mind you.

Payback's a mother, Larry. Enjoy dealing with the Justice Department!

}:-)4

[cksharks]

This lawsuit was pushed, prodded and helped along by none other than Orrin Hatch. I would like to see an investigation into how much money he received for that.

[kittymyrib]

If only Gore could have stolen the presidency with the help of those millions in Silicon Valley campaign cash, Ellison would have been sitting pretty. Too bad, so sad.

[Chad Fairbanks]

Hey Ellison! Ya feel that? Huh? Take it, Beeeatch!

[Mr. Bird]

Our company entertained proposals from SAP, Peoplesoft, and Oracle for a comprehensive HR/Finance/Supply Chain product. Peoplesoft is strong on the HR side, but is comparatively horrible on the finance side.

[Bush2000]

I remember reading articles around the time of the Microsoft trial warning Silicon Valley against getting into bed with policitians. But Ellison made his bed -- and now, he has to lie in it. These are the fruits of using the government as a blunt instrument of coercion against your competitors.

[kevkrom]

Bill Clinton through his justice department singlehandedly started the tech meltdown when they decided to pursue Bill Gates rather than Osama Bin Laden

Oh, please... that's patently ridiculous. The technology sector was gong to melt down -- there was no way for that bubble to keep growing without bursting. It was completely unsustainable -- look at the original boom which surrounded radio for a good parallel. All the Microsoft trial did was to force people to realize that about six months before they otherwise would have.