Oracle Reaps What It Sowed, Taxpayer Group Says

By Susan Jones | July 7, 2008 | 8:21pm EDT

(CNSNews.com) - The U.S. Justice Department filed a lawsuit on Thursday to prevent Oracle from taking over its software rival, PeopleSoft. That's what happens when the government is encouraged to mediate industry disputes, a taxpayer group warned.

"We believe this transaction is anticompetitive, pure and simple," the assistant attorney general in charge of the Justice Department's antitrust division was quoted as saying about the Oracle-People Soft merger. Critics quoted in press reports said the merger would lead to higher prices and fewer choices for customers.

Several years ago, when Oracle was leading the charge to get the Justice Department more active in the high tech sector, the National Taxpayers Union warned the firms that they would live to regret the day.

That day is here, the NTU said on Thursday, and now Oracle probably wishes it had listened.

"We said all firms would be better off if government pursued a less interventionist course vis-a-vis the private sector," said NTU President John Berthoud in a statement.

Nobel Laureate Economist Milton Friedman told NTU that business, in general, has a suicidal instinct.

"It often proposes laws in its own self-interest which destroy the underlying basis of the whole private enterprise system," Friedman said in the interview.

"I believe that is what has been happening recently in the computer industry," Friedman added. "Silicon Valley is suicidal in calling government in to mediate in the disputes among some of the big companies in the area and Microsoft. The end result will be that an industry that up to now has been able to proceed at a marvelous pace with little or no government regulation...that industry is now going to have government all over it.

"It's going to spend in legal fees over the next ten or twenty years, money which society would benefit from much more if it were spent in the kind of research and development that has brought us the many miracles in the area of Internet, in the area of home computers, industry computers, and all the rest," Friedman concluded.

NTU said it will continue to "promote sensible antitrust policy and seek to curtail judicial activism."

"Private sector firms should stop trying to use the nation's judicial system as a competitive weapon and instead unite with us to achieve real reform," Berthoud said.

Oracle, meanwhile, said it will fight the Justice Department's effort to stop its hoped-for takeover of PeopleSoft.

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