EN This text is made available for information purposes only. A summary of this decision is published in all Community languages in the Official Journal of the European Union. Case No COMP/M.5529 – ORACLE/ SUN MICROSYSTEMS Only the English text is authentic. REGULATION (EC) No 139/2004 MERGER PROCEDURE Article 8 (1) Date: 21/01/2010 EUROPEAN COMMISSION Brussels, 21.01.2010 C(2010) 142 final PUBLIC VERSION COMMISSION DECISION of 21.01.2010 declaring a concentration to be compatible with the common market and the functioning of the EEA Agreement (Case No COMP/M.5529 - Oracle/ Sun Microsystems) I. THE PARTIES................................................................................................................... 8 II. THE OPERATION .......................................................................................................... 8 III. CONCENTRATION ...................................................................................................... 8 IV. COMMUNITY DIMENSION........................................................................................ 8 V. PROCEDURE AND INVESTIGATION ....................................................................... 8 A. Pre-notification ................................................................................................................. 8 B. First phase investigation................................................................................................... 9 C. Second phase investigation .............................................................................................. 9 VI. COMPETITIVE ASSESSMENT ................................................................................ 11 A. Introduction .................................................................................................................... 11 B. Databases ......................................................................................................................... 12 1. Introduction ................................................................................................................. 12 1.1. Description of relational databases..................................................................... 12 1.2. Description of the parties and main competitors............................................... 15 1.2.1. Oracle and its database products................................................................. 15 1.2.2. Sun and its database products...................................................................... 18 1.2.3 Other main competitors................................................................................. 22 1.2.3.1. IBM .......................................................................................................... 22 1.2.3.2. Microsoft ................................................................................................. 23 1.2.3.3. Sybase ...................................................................................................... 23 1.2.3.4. PostgreSQL ............................................................................................. 23 1.2.3.5. Ingres ....................................................................................................... 24 1.2.3.6. Other RDBMS vendors.......................................................................... 24 2. Market Definition ........................................................................................................ 25 2.1. Product market definition ................................................................................... 25 2.1.1. Embedded vs. non-embedded RDBMS ....................................................... 26 2.1.2. Product market definition on the basis of other criteria ........................... 29 2.1.3. Conclusion on product market definition ................................................... 30 2.2. Geographic market definition ............................................................................. 30 2.3. Conclusion on market definition......................................................................... 31 3. Market characteristics and structure ........................................................................ 31 3.1. Market size and market shares ........................................................................... 31 3.2. Barriers to entry ................................................................................................... 33 3.2.1. Technology ..................................................................................................... 33 3.2.2. Reputation...................................................................................................... 34 3.2.3. Switching costs............................................................................................... 34 3.3. Maturity of the database market ........................................................................ 36 3.3.1. Sophistication of database products ............................................................ 36 3.3.2. Margins of proprietary database vendors................................................... 36 3 3.3.3. Expectation regarding further inroads of open source databases ............ 36 4. Compatibility of the concentration in the field of databases with the common market............................................................................................................................... 37 4.1. Notifying party's view .......................................................................................... 37 4.2. Legal test and application of the legal test to the specifics of the worldwide database market........................................................................................................... 39 4.3. Competitive situation pre-transaction................................................................ 45 4.3.1. Specifics of the database market.................................................................. 45 4.3.2. Oracle as the largest and strongest proprietary database vendor............ 46 4.3.3. Nature of the competitive constraint posed by MySQL............................. 48 4.3.3.1. Technology .............................................................................................. 48 4.3.3.2. Functionalities......................................................................................... 49 4.3.3.3. MySQL's open source business model and pricing............................. 53 4.3.3.4. Reduction of vendor lock-in .................................................................. 56 4.3.3.5. Product innovation and flexibility of deployment............................... 56 4.3.3.6. Conclusions ............................................................................................. 57 4.3.4. Evidence of the competitive constraint exerted by MySQL on Oracle and other proprietary database vendors ...................................................................... 58 4.3.4.1. Evidence for the overall database market............................................ 58 4.3.4.1.1. HQ Apps and CRM......................................................................... 58 4.3.4.1.1.1. HQ Apps.................................................................................... 59 4.3.4.1.1.2. CRM data.................................................................................. 69 4.3.4.1.1.3. Comparison of CRM and HQ Apps........................................ 73 4.3.4.1.1.4. Conclusion on HQ Apps and CRM......................................... 74 4.3.4.1.2. Surveys.............................................................................................. 74 4.3.4.1.3. Replies to the market investigation................................................ 80 4.3.4.2. Evidence of the competitive constraint in different market segments of the overall database market............................................................. 82 4.3.4.2.1. Web segment .................................................................................... 84 4.3.4.2.2. SME segment ................................................................................... 87 4.3.4.2.3. Large enterprise segment................................................................ 91 4.3.4.2.4. High-end segment ............................................................................ 94 4.3.4.2.5. Embedded segment.......................................................................... 99 4.3.4.3. Evidence of the dynamic nature of the constraint posed by MySQL ............................................................................................................... 103 4.3.4.4. Evidence of competitive constraint on other players beyond Oracle ............................................................................................................... 105 4.3.4.5. Conclusion on the evidence of the competitive constraint................ 106 4.4. Competitive situation post-transaction............................................................. 107 4.4.1. Evolution of MySQL after its acquisition by Oracle................................ 107 4.4.2. Extent to which other open source databases might develop to exercise a constraint on Oracle.............................................................................................. 114 4.4.3. Extent to which forks of MySQL might develop to exercise a constraint on Oracle ...............................................................................................................