Oracle's embarrassment: Dragged down by Oregon Obamacare, antitrust suit

Larry Ellison is doubly saddled this month with Oregon's bungled Obamacare website and a competitor's countersuit

There's the good Larry Ellison who donates hundreds of millions of dollars to charity but rarely talks about it, loans his valuable Asian art collection to museums for the public to enjoy, and has built a company (Oracle) that revolutionized the database and employs tens of thousands of people.

Then there's the bad Ellison who's used his billions to crush and devour the enterprise software industry, and charmed San Francisco into losing millions of dollars in backing his ego-stroking America's Cup competition.

The bad Ellison has been on full display this month, evidenced by Oracle's greedy attempt to eke out every penny from the corpse of Sun's hardware business by allegedly strong-arming tiny independent support specialists, as came to light in documents filed in federal court. (Oracle declined to comment on these matters.) Oracle's attack on a company that's roughly 1,000th its size is outrageous enough. But it's even worse that the move is intended to keep Solaris customers in line by forcing them to choose Oracle -- and only Oracle -- when it comes time to buy a maintenance agreement.

Another persona has been on view this month as well: can't-do Ellison. Oregon state officials finally gave up on Oracle's failed backbone for the Cover Oregon health care exchange; they're now moving Oregon residents to the federal Obamacare website, HealthCare.gov, that got so much grief. It must be particular embarrassing that the feds did a better job (relatively speaking) than Oracle and on a more complex system than Oracle was hired to build.

The debacle in Oregon is particularly egregious because its effects go far beyond the bounds of the usual enterprise software screwup by delaying access to affordable health care insurance for millions of people. For someone like Ellison who puts his money where his mouth is to help those in need, failing at the Cover Oregon effort has to hurt.

For Solaris services, it's Oracle the bully

Earlier this month, lawyers for Terix, a 17-year-old company that offers support for Solaris systems and other large servers, countersued Oracle, claiming that the software giant is trying to squeeze it out of the market by illegally using its control over the Solaris operating system, which it acquired when it bought Sun in 2010. (Last year, Oracle had sued Terix and Maintech, another support provider, alleging they "engaged in a deliberate scheme to misappropriate and distribute copyrighted, proprietary Oracle software code" in supporting customers using Solaris.)

Oracle "forces customers into all-or-nothing support contracts" with the software giant, without which they have no access to Solaris patches or firmware updates, says Terix CEO Bernd Appleby. That means Solaris users have much less incentive to hire support providers like Terix, which gets a quarter of its business from offering Solaris support.

By contrast, when Sun was alive, it "routinely" allowed hardware customers and third-party support providers to "obtain Solaris updates and Sun/Oracle firmware promptly upon release for free or a reasonable and fair cost," Terix's filing states. "Oracle turned off access to the free Solaris firmware repository in summer 2011, and now refuses to allow customers to obtain Sun/Oracle firmware unless they also purchase Solaris updates and Solaris software support dervices from Oracle," the filing states.

As Appleby explained to me, many customers would prefer to have Oracle support for only mission-critical hardware -- but not the rest of their servers. Oracle won't allow that. It insists that all servers be covered by any maintenance agreement, and companies that don't have a maintenance agreement can't download software updates. "If you don't have a maintenance agreement with Oracle, you are dead to them. Oracle won't even pick up the phone," he says.

But Oracle's lawyers will pick up the phone to threaten any company it believes is horning in on its lucrative support business.

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