Oracle Chairman Larry Ellison
According to CNBC, the parent Google Alphabet plans to stop using Oracle financial software in the coming weeks and use software from SAP instead.
Alphabet and Google’s core financial systems are moving to SAP in May, Google told employees in an email that CNBC viewed. The move relates only to the software that Google uses to track finances and there is no indication that the company is removing any other systems from Oracle.
The change is due to the fact that Google and Oracle are increasingly competing in the cloud computing market, following a similar move by cloud market leader Amazon, which over the course of several years has significantly reduced the use of Oracle software in favor of its own cloud services.
The move does not appear to be tied to the longstanding lawsuit between Google and Oracle regarding Google’s use of Java code in the application programming interface for Google’s Android operating system. The previous Monday, the Supreme Court ruled that it was fair for Google to copy Java code.
Oracle competes with Google in selling public cloud resources for hosting applications. Oracle refused to certify its long-standing database software for Google’s cloud for years, which meant customers weren’t sure if they could host Oracle databases on Google’s cloud without violating Oracle’s licensing guidelines.
“We’re not working with Google because we’re trying to compete with Google,” Ellison said at a meeting with analysts in 2018.
This lack of certification became a problem for Google’s cloud business as the company wanted to attract large companies, many of which use Oracle database software. As a result, Google focused more on deploying the SAP database software in the cloud, said a person familiar with Google’s cloud business and asked not to be named to discuss sensitive business matters. Also, this year Google introduced a way to run the Oracle database on a bare metal server without virtualization technology.
“With Google Cloud, Oracle customers can actively run their Oracle database workloads via our bare metal solution in Google Cloud. However, this is completely independent of our decision as corporate customers of financial software to switch our financial systems from Oracle to SAP”, said a Google spokesman told CNBC in an email. An Oracle representative declined to comment.
Larry Ellison, Oracle’s Co-Founder, Chairman, and Chief Technology Officer, regularly shows how companies are willing to use Oracle’s software and services. In March, Ellison spent a third of Oracle’s 45-minute earnings call talking about customer activity, and he said Oracle would pick up more than half of SAP customers.
It’s not clear how much money Google paid Oracle for the financial software. Even so, Ellison has boasted of his deal with Google. During a meeting with analysts in 2019, he said that when Google catalogs large amounts of information, that data is “actually in Oracle databases”. This may still be the case as this step only applies to Oracle’s financial software.
The hassle of migrating from Oracle’s financial software took months of work and extensive technical resources, said another person familiar with the move.
Oracle stock was down slightly on the news, while SAP stock rose to close 4.8%.
SEE: Google Cloud will be a very profitable business: investor