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Oracle-DOJ case winds down, heats up

Oracle Corp. CEO Larry Ellison is among the final witnesses slated to testify this week in the Oracle-DOJ courtroom battle, but Oracle says they won't be calling PeopleSoft CEO Craig Conway after all.

Attorneys for Oracle Corp. are continuing their attack on the DOJ's antitrust case, and are attempting to define the business application software market as one that could tolerate a merger between two of its largest players.

A stronger competitor to SAP in the tier-one or midmarket applications space is just better for competition.


Michael Dominy
senior analystYankee Group

During Friday's testimony, Oracle president Safra Catz's discussed details of "friendly" merger talks, which took place between Oracle and PeopleSoft Inc. about a year before Oracle launched a hostile takeover of its smaller rival.

Oracle CEO Larry Ellison is slated to testify this week, but Oracle attorneys said they no longer plan to call PeopleSoft CEO Craig Conway to the stand. According to Oracle, Conway's testimony is no longer necessary to prove its case.

The trial is scheduled to close July 2.

Michael Dominy, senior analyst for business applications and commerce for Boston-based Yankee Group, predicted that Oracle will stick close to the message that consolidation is becoming quite common in the large scale business applications space today.

PeopleSoft's Conway is expected to discuss statements from customers who said that a merger between the two companies would limit their choices when purchasing human resources and financial applications.

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"Craig Conway will clearly talk about this being bad for the marketplace," Dominy said.

On Friday, documents indicating that Oracle planned to lay off about 6,000 PeopleSoft employees were introduced in court. Catz dismissed the documents, and decried the layoffs as a worst-case scenario.

Earlier in the week, Oracle executive vice president Ron Wohl faced tough questions from the DOJ about papers that indicated competition from PeopleSoft prompted his company to add new functionality to its software.

The DOJ was attempting to prove the merger between the two companies would ultimately hinder such innovation and hurt customers. Wohl testified that any new product enhancements are a response to changes in the marketplace, and not just to any one competitor.

Dominy said that the outcome of the case depends largely on how the judge defines the enterprise applications market.

It would be good news for Oracle if the judge defines the market as encompassing all forms of business applications, including customer relationship management and marketing, Dominy said. If the judge should limit the definition to human resources and financials, that would weigh heavily in favor of the DOJ, he said.

"My view on this has always been that (the merger would) be positive," Dominy said. "A stronger competitor to SAP in the tier-one or midmarket applications space is just better for competition."

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