Oracle Trial Focuses on DOJ's 'Big Three' Theory

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The DOJ calls on PeopleSoft execs to explain how it is one of "only" three companies, along with SAP and Oracle, that compete in the high-end enterprise application market.

SAN FRANCISCO—Testimony in the Department of Justice antitrust trial against Oracle zeroed in on the government's key theory that PeopleSoft Inc. is one of only three companies that compete in the global market for high-end enterprise application software.

Richard Bergquist, PeopleSoft Inc.'s chief technology officer and the company's only fellow, testified that SAP AG and Oracle Corp. are the competitors PeopleSoft encounters most frequently in selling its human resources management and financial management software to enterprise customers.

Bergquist also testified about PeopleSoft's yearlong efforts to gradually develop additional financial management applications that would make it more competitive with SAP and Oracle.

PeopleSoft started in the late 1980s as a producer of enterprise human resources management software. Bergquist said it took five to seven years and millions of dollars in investment to make the company's financial service applications "competitive on a global basis" with offerings from SAP and Oracle.

The investment allowed PeopleSoft to grow steadily enough during the 1990s to close the large revenue gap that existed between PeopleSoft and SAP, bringing it from 7 to 1 in 1995 to 3.8 to 1 in 2003, Bergquist said. PeopleSoft shrank the revenue gap between it and Oracle from 15 to 1 to 4.2 to 1 in the same period, he said.

The purpose of the testimony was to show what PeopleSoft had to do over the past 17 years to compete in the market defined by the Department of Justice (DOJ) as "high-function" software, typically purchased by the biggest and richest global enterprises.

Oracle's lead attorney, Daniel Wall, has challenged the validity of the DOJ's market definition. In opening arguments Monday, Wall claimed that a number of other companies, including Microsoft Corp., Lawson Software Inc., Automatic Data Processing Inc. and American Management Systems Inc., should also be considered as competitors in the enterprise market.

Under questioning by DOJ trial attorney Phillip Malone, Bergquist described all of these companies as niche players that PeopleSoft rarely encountered in head-to-head sales competition. None of these companies had products that were as complex, scalable or ran on all the platforms offered by PeopleSoft, SAP or Oracle, he said.

Under cross examination, however, Wall presented PeopleSoft documents listing the number of times in the past two years when PeopleSoft competed for sales with J.D. Edwards & Co., SAP, Siebel Systems Inc., Lawson, Microsoft, ADP and others.

PeopleSoft acquired J.D. Edwards in June 2003, days before Oracle announced a $7.7 billion tender offer to buy out the company.

DOJ has gone to trial in U.S. District Court here seeking a permanent injunction to prevent Oracle from closing the PeopleSoft buyout.

Keeping a close eye on the Oracle-DOJ trial will provide valuable insights into the acts of software giants, Lisa Vaas writes. Click here to read more.

Gary Rebak, an attorney representing PeopleSoft, raised objections to the court's allowing several documents to be displayed on courtroom monitors viewed by the public, claiming that the documents contained confidential corporate information.

Judge Vaughn R. Walker ordered the court clerks to turn off the monitors for any of the documents that brought objections from Rebak.

Testimony from DOJ witnesses will continue Wednesday, with appearances by Nancy Thomas from IBM Global Services and executives from Target Corp. and Nieman Marcus Group, both PeopleSoft customers.

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John Pallatto John Pallatto is eWEEK.com's Enterprise Applications Center editor. His near 30 years of experience as a professional journalist began as a member of the founding staff of PC Week in March 1984. Pallatto was PC Week's West Coast bureau chief, a senior editor at Ziff Davis' Internet Computing magazine and the West Coast bureau chief at Internet World magazine.

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