The European Commission is requesting information from market participants regarding Oracle’s licensing practices. These practices allegedly make it more difficultfor customers to switch to competitors than intended. A formal investigation has not yet been launched. Rival SAP reached a settlement with Brussels earlier this year regarding similar concerns.
Antitrust officials at the Commission are sounding out stakeholders on how Oracle structures its licensing, Reuters reports, citing sources familiar with the matter. Such an inquiry could lead to a formal investigation. However, it could also be closed without further action, for example, if there is insufficient evidence.
Oracle declined to comment to Reuters. The Commission stated that it continues to monitor anti-competitive practices and abuses of market power in the tech sector.
SAP avoided a fine by making commitments
A comparison with SAP is obvious. In September of last year, Brussels opened a formal investigation into the maintenance and support terms for the German supplier’s on-premises ERP software. The concerns included automatic renewal of license terms, restrictions on switching to other providers for maintenance, and additional costs for returning customers.
In July of this year, the Commission accepted SAP’s binding commitments, thereby closing the case without imposing a fine. Since then, customers have been able to split up their SAP landscape, choose a different provider for each component, and cancel unused licenses more easily. Techzine previously reported on the concessions SAP made to avert further investigation. It is possible that Oracle might do the same, although, as mentioned, the discussions are currently at far too early a stage to expect that anytime soon. The consequences could be severe, however, as the EU can impose fines of up to 10 percent of global annual revenue following an investigation.
Java as a previous point of contention
Oracle licenses have long been under scrutiny by customers. The company switched to a per-employee subscription model for Java, with rates starting at $15 per employee per month. According to Gartner, this can result in costs that are two to five times higher than under the old model, because Oracle includes the entire employee population in its calculations.
Licensing disputes are nothing new for Oracle. In the Netherlands, for example, there was a long-running licensing dispute years ago between the national government and Oracle, which was ultimately resolved through a settlement. It remains unclear whether Brussels will proceed with the case.