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DOJ Asked to Investigate Oracle?s Hardware Maintenance Policies

By Stephanie Robinson

Many businesses that partner with Oracle to resell its server hardware or to host software solutions built on Oracle platforms are familiar with that company?s sometimes complex licensing rules. Many companies also are familiar with the fact that ?complexity,? as applied to those rules, often could be replaced by ?unreasonable? or even ?draconian.? One industry group recently fired what could be the opening salvo against Oracle in an effort to attack some of those rules as being anticompetitive and in violation of U.S. antitrust law. In a written appeal filed with the U.S. Department of Justice, the Service Industry Association (SIA), an industry organization representing computer, medical and business products service providers, has requested action against Oracle?s policies pertaining to Sun server hardware maintenance. In its letter, the SIA cites to new policies instituted by Oracle that effectively restrict access to necessary operating systems software updates only to customers with active Oracle hardware maintenance contracts. The effect of the policy is to keep third-party hardware maintainers from servicing Sun hardware, which is widely used across many different industries. According to the SIA, because of Oracle?s market power, this represents an attempt to monopolize a significant segment of the server hardware maintenance market in violation of U.S. antitrust law. This may be a new policy for Oracle, but it is consistent with past practice by Sun prior to its acquisition by Oracle in January 2010. In the past, Sun attempted to justify that policy as an effort to protect its trade secrets from disclosure to third parties who may try to misappropriate the information, thereby damaging Sun?s business. Oracle likely will try to justify the new policy in the same way. However, that justification seems dubious, since third-party maintainers generally do not compete with Oracle as software publishers or hardware manufacturers, and even if there were a security concern, it is one that could be addressed more efficiently with an appropriate confidentiality and non-disclosure agreement. Oracle customers and business partners may want to keep an eye on the DOJ?s response to the SIA?s appeal and on any other legal developments related to this issue....

Full post as published by Business and Technology Law on November 29, 2010 (boomark / email).