Oracle has reportedly garnered some unwanted attention from the European Commission around its enterprise software licensing practices.
The Commission’s antitrust regulators are currently gathering information from third parties about Oracle’s licensing practices to assess whether there is evidence to warrant further action, although it has yet to open a formal investigation into the company, MLex, an independent news outlet specializing in legal risk and regulation, reported.
The Commission, in response to an email inquiry, said that there is currently no formal investigation into any company but stressed that it would continue to monitor possible further anticompetitive practices and abusive conduct in the enterprise software sector.
Oracle did not immediately respond to an email query seeking comments on the issue.
The reported scrutiny into Oracle comes weeks after SAP agreed to binding commitments to address Commission concerns over practices that restricted customers’ ability to switch support providers or terminate certain contracts.
If the EU sees similar practices at Oracle, where licensing or support terms make it costly for enterprises to reduce dependency, switch providers, or change their usage, the regulators could potentially apply the same principle: vendor dominance cannot be used to artificially restrict customer choice in the aftermarket.
In that scenario, the Commission is likely to open an investigation or proceedings under the EU’s Article 102 rules, which prohibit companies with a dominant position in a defined market from engaging in any abusive conduct.
Several products and their attached licensing practices across Oracle’s portfolio are at risk of drawing more scrutiny from regulators, analysts say.
“Oracle Database is probably the biggest area. Its complex processor, virtualization, and cloud licensing rules can make it difficult for enterprises to know exactly what they owe. Regulators could examine whether these rules make running Oracle on competing clouds or reducing Oracle usage unnecessarily expensive,” said Pareekh Jain, principal analyst at Pareekh Consulting.
Jain pointed out that Java too could attract regulators’ attention as Oracle’s subscription charges are based broadly on an enterprise’s employee strength rather than just Java users.
“For some enterprises, this has sharply increased costs. Regulators could examine whether this pricing approach is reasonable for a technology already deeply embedded in enterprises,” Jain noted.
Similarly, its on-premises ERP portfolio and CRM applications, which include Oracle E-Business Suite, PeopleSoft, JD Edwards EnterpriseOne, Siebel, and Hyperion, could also come under the Commission’s radar, mostly because the licenses of these products resemble practices that could present parallels with the concerns raised in the SAP case.
“Enterprise customers often run these products for decades and want third-party support rather than migration. Rules that make dropping Oracle support, reducing unused licenses or moving only part of the estate to another support provider expensive could attract scrutiny,” Jain said.
The analyst was referring to documentation around Oracle’s Software Technical Support Policies that generally require licenses within a license set to maintain the same level of technical support.
The policies also allow Oracle to reprice support for the remaining licenses when customers reduce their footprint and impose additional costs on reinstating lapsed support.
That policy document also covers a broad range of Oracle products beyond its ERP and CRM portfolio, including its database, middleware and infrastructure software, potentially widening the scope of products and licensing practices that could draw regulatory scrutiny.
A separate Oracle technical support policy for Exadata also contains similar provisions related to support levels, license reductions, and reinstating lapsed support.
That prospect of greater scrutiny by the Commission, especially in the wake of the SAP case, could be significant not just for Oracle but also for the enterprises that have built large parts of their IT estates around its software.
For enterprises, the most immediate benefit, according to Manoj Chandra Jha, principal analyst at Nord-IQ Research, would be more negotiating power.
“Expect CIOs and procurement teams to use the mere possibility of a Commission scrutiny to extract concessions in ongoing renewals long before any formal remedy is decided,” Jha said.
“Enterprises could push for greater freedom to drop unused licenses, use third-party support, reduce maintenance costs, or gradually move workloads away from Oracle without being punished financially,” echoed Jain.
That, in turn, could help CIOs reduce Oracle dependency step by step instead of going through a full migration that is bound to be expensive, Jain added.
However, for CIOs and enterprises without ongoing or upcoming Oracle renewals, Jha cautioned against expecting immediate cost relief or contractual flexibility based on the SAP precedent.
“This is likely to be a multi-year outcome, not a Q4 planning assumption,” he said.
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