Oracle Hammers At Govt View Of Industry

Oracle's final witness says DOJ has taken a much-too-narrow view of what constitutes high-function applications.
Oracle's final witness testified Thursday that the government has neglected to consider the price and competitive impact associated with the entire integration layer of the enterprise software "stack." University of California at Berkeley professor David Teece also said that the Justice Department's "narrow" analysis of what constitutes high-function applications amounts to just 1.8% of the total app revenue of Oracle and PeopleSoft Inc.

Teece, a professor of business administration at the university's Haas School of Business, said the relevant market is broader than just human-resources-management and financial-management apps. Teece also said a takeover of PeopleSoft would strengthen Oracle's ability to compete in the stack--which he defined as enterprise-apps software, databases, operating systems, and hardware. He defined competitors in the broad stack as including IBM, Microsoft, and SAP.

Teece's position conflicts with the government's opinion that application software is the only relevant technology in the case and that a takeover of the only two U.S. vendors in this market would create a monopoly. Oracle execs have said these apps are only a small part of their business and a small part of customers' infrastructure.

Teece compared the need for integration of products in this stack with the necessity for integration of an Xbox console with Xbox games, which, if not interlocked, result in performance degradation.

"When you have closely coupled systems, you can't look at one little piece [such as enterprise-application software] of that stack without looking at the rest," he said. He added that it makes the most economical sense for vendors such as Oracle and PeopleSoft to support only one stack, otherwise the research-and-development expense associated with supporting multiple platforms would be unbearable.

During cross-examination, government attorney Steve Kramer tried to show that enterprise-application software can be examined and considered as standalone products. Kramer raised the issue that not only do customers have more flexibility with loosely coupled enterprise software, but it is the strategy of enterprise-app players to support more than one stack.

He displayed a document that noted it's SAP's strategy to support more than one stack. The document said, "A key ingredient of SAP NetWeaver is complete interoperability with both Microsoft .Net and IBM WebSphere. So IT organizations don't have to decide between the two technologies." The government's attorney also noted that PeopleSoft execs have testified that they intend to continue to support a number of platforms.