Oracle’s Bad Boy Image

No one at Oracle will ever be nominated for sainthood, and that’s probably OK with them. Over the years the company has developed a bad boy image that in some cases is richly deserved, while in others it has been embellished by events.

Much derives from the brash doings of founder and longtime CEO (now CTO) Larry Ellison who, from all appearances, may be a charter member of the “never explain, never complain” club.

Ellison does what he does, and the outside world might not fully appreciate it but that’s fine. You’ll never see him getting all mushy and doing an Elon, as Tesla’s CEO did in a recent interview with The New York Times. Business is hard? So what? Push on. It can be refreshingly old school.

The Dastardly Software Audit

Oracle’s marketplace actions on more than one occasion have served to give the business a black eye that, in retrospect, might not be fully deserved. For example, Oracle’s software audit process recently has come under the microscope.

Oracle exercises its contractual right to audit the use of its software at customer locations. When an audit turns up a violation or potential violation of the license agreement, the sides work out a solution that often involves additional license purchases. No one likes this.

The process makes Oracle look bad in the eyes of the public, who think of licensing as supporting one or a few software deployments. However, although the audits are randomized, they often involve customers with hundreds, or even thousands, of licenses spread across far flung empires.

Rimini Street Ruling

The recent ruling in the seemingly never-ending Rimini Street litigation provides a window into how Oracle’s public image gets formed. To recap, Rimini Street in 2015 was found guilty of 93 Oracle patent infringements involving its methods of providing competing services to Oracle customers, often at half the cost of the competing Oracle service.

Rimini Street lost on appeal and had to pay Oracle US$46.2 million in prejudgment interest and attorney’s fees. Another $27.7 million fine was added shortly after. Earlier this year the Ninth Circuit Court of Appeals reduced the fines by $50 million.

However, the court last week issued a permanent injunction against Rimini Street and awarded nearly $30 million in attorney’s fees to Oracle. Yet that’s not the interesting part of this story regarding Oracle’s reputation.

There are many people in the industry who already have a fixed idea about Oracle and often it’s not a good one. Take a look at the judgment issued by judge Larry Hicks of the Nevada District Court.

Among other things, Hicks wrote that Rimini was able to sell low-cost service contracts because, unlike Oracle, it didn’t have the overhead of developing service documentation and diagnostic software and other things relevant to supporting its products.

Rimini didn’t have to “expend significant resources in time and money in developing its own competing software,” the judge noted. The cost disparity damaged Oracle’s reputation, because it “created the impression that Oracle was overcharging for support and eroded the bonds and trust that Oracle has with its customers.”

Rimini has been growing and making money, the exact picture of a startup success story. However, Hicks’ ruling reminds everyone that “Rimini Street would not have achieved its current market share and exceptional revenue growth without its infringing conduct.” That conduct was “conscious disregard” for Oracle’s copyrights.

Last Words

There’s a lot of litigation in Silicon Valley that doesn’t hit your screen. Often parties settle because there’s much more money to be made in the tech market than in court. There are many reasons for the litigation, but at least some of it stems from overly broad patents that typically are granted in the early stages of disruptive innovation.

At some point the industry might benefit from refactoring its patents, which has happened in other fields already. Imagine the Wright Brothers or their descendants owning the rights to “flight,” so that every time you boarded a plane the airline had to pay something to the heirs.

Flying machines are more than 100 years old at this point, and any patent has long expired. That’s how our system of capitalism works. It enables inventors to stand on the shoulders of previous giants to make the world new again. However, this isn’t that. Software support focuses on a particular product down to its version, operating system and other factors. It’s a product that takes resources and skill to produce, and taking it constitutes a theft.

There’s no way a company like Oracle can defend itself from such theft without appearing in the eyes of some as bullying a much smaller competitor. Still, Oracle has a duty to its stakeholders to defend its property rights. This isn’t to say that the company doesn’t deserve to be sued now and then, and there are certainly other cases now working their way through the courts that I am not offering an opinion on. Quite possibly, though, the company’s reputation could benefit from softening its apparent position about complaining and explaining.

Oracle has a big PR organization that seems focused on getting product information out, which is fine. However, the world has changed. It’s not enough just to have good or even great products. Today a vendor needs to be seen as doing the right things for the right reasons, too.

The opinions expressed in this article are those of the author and do not necessarily reflect the views of ECT News Network.

Denis Pombriant

Denis Pombriant is a well-known CRM industry analyst, strategist, writer and speaker. His new book, You Can't Buy Customer Loyalty, But You Can Earn It, is now available on Amazon. His 2015 book, Solve for the Customer, is also available there. Email Denis.

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