The judge overseeing the U.S. Department of Justice's lawsuit to block Oracle's PeopleSoft acquisition was given a tutorial Friday in enterprise software.
Judge Vaughn Walker of the U.S. District Court for the Northern District of California had requested the tutorial to help him better understand the products and technologies involved in the case before it comes to trial June 7.
Attorneys for the DOJ took an unexpected tack, using segments of a videotaped deposition from Oracle's own senior executives, including Chief Executive Officer Larry Ellison, to describe their view of the products and the market. Oracle's tutorial was given by Ron Wohl, executive vice president for applications development, and was more technical in nature.
The DOJ is trying to block Oracle's takeover bid on the grounds that it would stifle competition. It has argued that the merger would leave only two companies -- Oracle and SAP -- to provide the broad suites of financial management and human resources software that corporations need to run their businesses. Oracle argues that there are many more providers of such software.
In a videotape of his deposition made January 20, Ellison, under questioning from a DOJ attorney, discussed the benefits of using a single, broad suite of applications to run a big businesses. The alternative method of stitching together "best of breed" products from multiple vendors is less efficient and more costly, he said.
"Systems integration is the gift that keeps on giving," he joked, saying that services companies such as IBM Corp. and Accenture Ltd. charge customers on an ongoing basis to help them keep a variety of applications in synch and up to date.
Wearing a brown jacket and a black sweater, Ellison seemed relaxed and cooperative in the brief deposition clip shown to the judge, occasionally repeating himself for the benefit of a stenographer.
The DOJ also used deposition testimony from Jeff Henley, Oracle's chairman and chief financial officer, in its tutorial. They apparently hoped to show Judge Walker that even Oracle's own executives see benefits in using a broad, integrated suite of applications, rather than products from multiple vendors.
Richard Bergquist, PeopleSoft's chief technology officer, provided the bulk of the DOJ's approximately hour long tutorial. He began with the basics of computing, describing chips, "hardware machines," databases and middleware, and went on to describe PeopleSoft's software.
At one point he asserted that "enterprise software for large corporations is supplied by SAP, PeopleSoft and Oracle," a remark that cut to the heart of the DOJ's case against Oracle.
That prompted criticism from Dan Wall, lead counsel for Oracle, who told reporters afterward that the parties were not supposed to use the tutorials to begin arguing their case. "When you have the PeopleSoft guy saying there's only three providers then I think it's clear they are trying to make their case," he said.
Still, Oracle's presentation also seemed to lay the groundwork for some of the arguments it is expected to make at trial. Like Bergquist, Wohl began with the very basics of computing, but he characterized the enterprise applications market as being composed of "many" vendors rather than a few.
He went into far more technical detail than did Bergquist, explaining the shift from client/server to Internet-based computing and the importance of technologies such as clustering, data warehousing and Web services. He said that no single customer uses all the modules and functions in a broad suite of applications. And he said that scalability tends to be less important for human resources and financial management applications, which typically are used by a smaller number of full-time users.
At the end of Wohl's presentation, Oracle counsel Dan Wall told the judge, "We don't intend to tell you how many applications providers are available; we think we can handle that on June 7."
Judge Walker appeared to listen attentively. He seemed unsure about middleware, asking at one point if it referred to "applications tailored for different users," perhaps because Bergquist had mentioned portals in his explanation of middleware. Bergquist told him that was not the case, and that middleware is so called because it sits in the middle of the database and application layers.
At the end of the tutorials, Judge Walker said, "This is very helpful, I appreciate it very much."
Speaking to reporters afterward, Oracle's Wall said it is important for Judge Walker to grasp the technologies involved in the case, particularly Web services. "If you want to understand this case correctly, you need an understanding of the technologies involved," he said.
Earlier Friday, Judge Walker appointed a retired judge to act as a moderator, or "special master," to help the parties resolve conflicts over documents that they have requested from each other and from third parties. Lawyers for both Oracle and the DOJ complained that they had yet to receive some of the materials that they had requested.
In particular, Wall complained that Lawson Software Inc. had so far provided no company documents except those that are publicly available. He also grumbled that PeopleSoft delivered 140,000 pages of documents on Thursday night, hours before the deposition of PeopleSoft President and Chief Executive Officer Craig Conway, which took place Friday.
Gary Reback, an attorney representing PeopleSoft, responded that his company has made two million documents available and has made its CEO available for deposition without being compelled by the court to do so.
Judge Walker ordered the parties to exchange lists of the exhibits they plan to submit at trial by early next week. On Friday they will meet with the special master to try to iron out their differences over the subpoenaed documents.
The DOJ had also requested a second deposition of Ellison.