BusinessCompany NewsMicrosoft fears spur on Oracle’s bid for PeopleSoft

Microsoft fears spur on Oracle's bid for PeopleSoft

A maturing enterprise software market and the spectre of Microsoft entering the sector were reasons behind Oracle's plans to acquire PeopleSoft, Oracle chief executive Larry Ellison testified yesterday.

Link: PeopleSoft slams main rivals

‘There was a lot of consolidation going on around us,’ Ellison testified in a San Francisco courtroom. ‘And we wanted to be a survivor and a consolidator.’

The US Department of Justice (DoJ) has filed suit against Oracle to block its $7.7bn hostile takeover of PeopleSoft, arguing that the acquisition would limit competition and drive up prices in the fields of high function human resource management and financial management software.

The spectre of Microsoft entering the market and driving down prices, was seen as a particular threat.

‘If Microsoft enters the market, prices will drop like a rock,’ Ellison said.

‘Microsoft’s strategy is to be a low cost provider, up to and including zero,’ he added.

But Microsoft executives testified earlier in the trial that it has no intention of moving into high-end enterprise applications.

By acquiring PeopleSoft, Oracle said it could be able to double its customer base, allowing the company to both increase investment in new technology and lower prices without sacrificing margins.

During cross-examination, the DoJ tried to prove that Oracle would raise prices after a PeopleSoft acquisition. Ellison however denied those claims. ‘Every day, there are more and more competitors. PeopleSoft, whether they remain or disappear, is not going to affect prices.’

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