The European Union has spoken. The EU's support of Oracle Corp.'s (ORCL) $7.4 billion acquisition of Sun Microsystems Thursday didn't come as a big surprise but it is no doubt a key moment for the industry, especially for Sun, the fourth largest maker of server computers.At the heart of whether the merger would actually be allowed was an open-source software called MySQL, whose database is owned, developed and supported by Sun. With 100 million copies of its software downloaded or distributed, it remains the world's most popular open source database software. The key question, though, was whether MySQL, which Sun bought in 2008, and Oracle were direct competitors. Regulators were concerned that a merger of the two companies would lead to the creation of a monopoly.
The EU, in the end, said their products didn't compete in most parts of the market. "Oracle's acquisition of Sun has the potential to revitalize important assets and create new and innovative products," European Competition Commissioner Neelie Kroes said in a statement in Brussels.
Like any major acquisition, the early chatter was about jobs. UBS estimated that Oracle may cut as much as half of Sun's work force, which Sun duly denied in a statement, but the bigger issue was more technical.
The jury is still out on how much the acquisition will change things for consumers but the announcement has got programming geeks to engage in a furious debate on bulletin boards and blogs, predicting the future of iconic technologies such as Java, OpenOffice and MySQL under Oracle.
Deeper Implications For Tech Industry
Amsterdam-based Software Improvement Group has already warned large companies not to deploy Oracle's OpenOffice until the company shows it is really committed to the product. Experts haven't missed the chance to talk about Oracle's history with open-source software. As the second-biggest software maker, Oracle is best able to monetize its products and profit from its huge customer base.
The decision to allow Sun and Oracle to merge, though, may have far deeper implications for the tech industry as a whole, greatly affecting the valuations for open-source vendors in the future. Companies like Oracle, Sun and RedHat (which bought JBoss in 2006) are now competing readily with open-source vendors.
Of course, the companies most carefully watching the Sun-Oracle merger play out are the hundreds of open-source developers -- the Davids of the tech world -- who try to get a foot in the door with their innovation and creativity. Whether they will continue to innovate or find themselves daunted by the Goliaths in the marketplace remains to be seen.
Introduction to Value Investing
Are you the next Warren Buffett?View Course »