The European Commission Investigates Oracle’s Software Licensing Practices
The European Commission is gathering information on Oracle’s cloud software licensing methods, reminiscent of their recent inquiry into SAP‘s practices. This follows reports from Reuters and initial coverage by MLex.
While the Commission confirms they are monitoring potential anti-competitive behaviors, they have not initiated a formal investigation against any company. This process often begins with soliciting information from third parties, offering companies an opportunity to address concerns before official proceedings.
The case of SAP in July serves as a parallel. They resolved similar licensing worries by making it easier for customers to switch to rival cloud providers and terminate contracts, averting potential fines.
The focus is on licensing terms that might make software more expensive to use on competitors’ clouds or difficult contract terminations, potentially keeping clients tied without requiring the provider to win them back. Oracle’s databases, deeply integrated into various systems over decades, present unique challenges due to their leverage over licensing terms.
Oracle has faced licensing complaints for years, often resolved through commercial agreements. However, with the shift to cloud computing, these terms can influence cloud provider competition. As a significant cloud provider itself, Oracle’s licensing model takes on added significance.
The Commission’s investigation aligns with their broader focus on the cloud market, including inquiries into Google‘s search conduct and regulations under the Digital Services Act and Digital Markets Act.
For European buyers, the key consideration is switching costs. If moving a database to another cloud requires new licenses or makes existing software expensive, genuine choice between providers becomes hindered. This issue intersects with Europe’s discussions on technological sovereignty as public bodies consider migrating workloads to European clouds.