How Oracle Weaponizes the US Legal System

Last Updated on March 21, 2021 by Shaun Snapp

Executive Summary

  • Oracle uses the US legal system in a pernicious manner to intimidate customers and to extract far more than they contribute to the system.
  • We analyze how they do this.

Introduction

In the article How Accurate Are Oracle’s Criticisms of Rimini Street?, I described how Oracle was using the US courts to try to invalidate a legitimate business model of 3rd party support and that they were doing it to maintain their 94% support margins. And this got me thinking of how Oracle uses the US legal system more broadly.

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The Striking Thing About Oracle

What is striking is how much Oracle is dependent upon the US government for its business model. They require a lack of anti-trust enforcement (approval of all acquisitions regardless of the harmful impact on customers and employees within acquired vendors.). They want to weaponize the US legal system against their customers, dropping fallacious claims into legal contracts, and beg for the government’s assistance in shutting down the 3rd party support market so they can get their 94% margin.

This is similar to banks, who pretend to be rugged “individualists” while loaning out government money through the fractional reserve system. And receive uncompensated government insurance. Oracle is highly dependent upon the government for everything it does.

When reading this comment, Vinnie Mirchandani had the following comment.

Vinnie Mirchandani’s Comment

“If Oracle would support customizations, offer more personalized support and yes, cut prices, 3 pm would not exist. I have said this for over a decade. It’s gone on so long, Oracle looks like a Don Quixote chasing after imaginary windmills. Especially when Oracle claims to want cloud revenue it looks desperate to protect on-prem revenue. Oracle should have been focused on next gen products. Fusion is 15 years old, NetSuite 20. Why are they not dominant by now? Lawsuits rarely help your brand. When the Supreme Court rules unanimously against you, as it did recently in favor of Rimini, it definitely does not help Oracle’s brand. Like I said, to me it increasingly looks Quixotic. Shaun, you may have more inside info than I do but I would say you are overreaching about their relationship with the govt.. The DOJ sued Oracle start of the century, DOD just eliminated them from 10 Bn JEDI bid and SCOTUS ruled 9-0 against them. They lobby like every large corporation but doubt they get their way all the time.”

There is an important distinction to make, so I am glad that Vinnie asked what I wrote may be interpreted differently from what I mean to say.

How Oracle Works the US Legal System

I did mean to say that the government always sides with Oracle. Oracle has been sued and lost twice for defrauding the government. See how in the article How Oracle Lost Multiple US Government Lawsuits for Fraud. If they had some “special relationship,” or at least some “special relationship” across the board, those two cases would not have happened.

It is clear that the DOD intensely dislikes Oracle because of Oracle’s previous behavior with them. Moreover, Oracle was very rightly eliminated from JEDI. Oracle’s entry into the competition was always a bit of a punch line to people who know the competitors’ cloud capabilities in the space. Although it should be noted, Leon Panetta, the ex-director of the CIA and Secretary of Defense, sits on Oracle’s board of directors.

Therefore, it clear that Oracle is trying to buy this influence, as it is unlikely Leon Panetta is helping provide oversight for investors as he lacks any software industry experience. But instead has been hired as a board member to work his connections in the US Government on behalf of Oracle. I am open to alternate interpretations,. Why else would Oracle want Leon Panetta on their board?

The issue I am pointing to is how Oracle weaponizes the US legal system. For example, as pointed out by House of Brick, Oracle has clauses in contracts that it enforces on many customers, but when challenged in court, it refused to defend one of them to not create a public record. They lost that case, but they continue to make that claim in other contracts to other customers. Oracle knows that only a tiny minority of its customers will take them to court to test a clause. I am open to suggestions, but is there another vendor that uses the court systems with such malicious intent as does Oracle?

The US Government’s Constant Approval of Oracle’s Acquisitions

I could get into Oracle’s acquisitions, but if we retake the PeopleSoft example, when the CEO of a company, particularly with Larry Ellison’s track record, publicly states that he intends to replace the acquisition’s application with Oracle. The acquisition is laid bare as an apparent attempt to kill a competitor in the market and access their customers. What more does the government need to deny the acquisition?

Acquisitions must meet a test of being in the public interest. Before the acquisition and everything that happened to PeopleSoft post-acquisition, the behavior of Oracle has demonstrated that the acquisition request should have been denied.

This is how UpperEdge describes Oracle’s acquisitions.

“Oracle is not really an application company — they are a technology company that acquired their way into the application space for profits. Think about it. When was the last time Oracle announced something truly innovative with one of the many application companies they have acquired over the years? I can’t think of one either.

Oracle is a database technology company and their success was created by having the best database in the world. But all of their applications have come through acquisition in an effort to buy market share and capitalize on the recurring support revenue stream. Most of the innovative talent that built those applications eventually left Oracle and moved on to new challenges at other start-ups, like Workday. Application innovation is just not part of Oracle’s core culture.”

I am not claiming that Oracle has any special relationship with the US government.

My claim is that Oracle uses the legal system and the acquisition system in underhanded ways that seek to stifle competition and excessively extract from their customers. Moreover, they are more reliant on the US legal system for their business model than are other software vendors.

Suppose we take your example of evidence of periodic and continual rulings against banks or financial institutions. Companies like Bank of America or Morgan Stanley routinely payout fines to the Department of Justice for a wide variety of shenanigans. However, because the US Government finds them guilty of violating various rules and requiring them to pay these fines, it could not be used as evidence that both of these entities have a business model based upon the government.