The Story of Oracle: Part Three

how Stuff Works and I love all things tech. And at the end of our last episode, we left off with Oracle in the year two thousand, Larry Ellison, a co founder of the company, had just decided to consolidate power, and according to former Oracle president Raymond Lane, stripped him of all authority from the role of president in order to convince Lane to resign. So that's what Lane did, and Oracle stock took a little bump and reviews. The most recent software for Oracle at the time, We're mixed

at best. Oracle had also failed to capitalize on Larry Ellison's grand plan to transform computing by boarding everything over to a web based approach. He had hoped to introduced network computers, which were essentially stripped down PCs that have very few bells and whistles. They didn't even have a hard drive, which would have brought the price down to about five dollars per unit, so that would be the

attractive factor there. All the software and storage that you would need for your Your computer would actually be accessed over the Internet, so all you had to have was a persistent Internet connection. Again, this is sort of like going back to the old mainframe days where you would use a dumb computer terminal to access the power of the main frame, except instead of a mainframe, your accessing

servers on the Internet. He was ahead of the curve on that one, and the experience uh that Oracle actually delivered ended up falling short of the promises that he had been making, something he actually apologized for at the press conference in and it took a few years, but later on we would actually see computers similar to the network computer concept hit the market, with stuff like chromebooks, for example. This was also right around the time that

the dot com bubble was collapsing. Startup companies that seemed to be destined for greatness were fizzling out left and right. Oracle was better established and wasn't solely reliant upon web oriented businesses, and it was able to get through the turmoil, as did both net Suite and salesforce dot Com, which were two web based ventures that had been launched by former Oracle employees. They were also two ventures that Larry

Ellison had helped fund a couple of years earlier. So all three of those managed to get through the dot com bubble collapse, but a lot of other companies weren't so fortunate. Oh and there was another thing that happened in two thousand. There was an event called trash Gate. At least later on it was dubbed that. Let me set the grounds for this because it's kind of a juicy scandal. So Oracle's arch enemy in the market was

always Microsoft. Microsoft was the number one largest software company in the world, and Ellison always wanted Oracle to overtake it, and he was always pushing for that to to take that spot away from Bill Gates's company. Not at the time, Microsoft was in the middle of a massive antitrust lawsuit. I'll probably do an episode at some point to really dive into that lawsuit in detail and explain what what

was happening and why it was important. But anyway, the important thing was that Microsoft was financially funding several groups that were lobbying on the company's behalf, and Oracle wanted to do some investigation here and try to kind of uh counteract these groups influence on the outcome of this antitrust lawsuits, so they hired an investigative firm to look into those groups, and the efforts went so far as to offer up essentially a reward for handing over the

contents of waste paper baskets to see if there were any evidence there the groups were working to influence the outcome of the case, thus the term trash gate. Now that didn't reflect well on either Microsoft or Oracle. Oracles accusations that Microsoft was using these groups in a way to try and get a better outcome for this antitrust lawsuit, that's not great. But then Oracle also wallowing in the garbage of another company in order to look for evidence,

some dirt to dig up on them. That didn't look great either. Ellison would argue that the actions were entirely legal. Maybe not ethical, but they were legal, although you could argue that nobody really came out of that looking too great. But despite all of these things, despite the controversy, despite the bump in the stock price, despite all of that, the company was still in a strong position, much better than it had been a decade earlier in the early

nine nineties when things were not so certain. So let's learn about what has happened with Oracle since two thousand and where it is today. One other thing that I have to cover that did happen in two thousand was that Oracle partnered with a Texas based company called Entrust Technologies Incorporated on a project named Oracle Advanced Security. Now. This was meant to combine database technology with strong encryption

and authentication tools to better protect data from hackers. The project would become an add on feature for Oracle Database Enterprise Edition. Today's version of this includes the ability for administrators to mask specific parts of a database so that only authorized users can view those sections. Unauthorized users won't be able to see those sections, but they would still be able to see other ones, which comes in handy if you want people to work with databases that contain

sense the material that they really shouldn't see. They can still do their work in the sections of the database they are authorized to use, and the bits they're not supposed to see will just remain hidden from view. So you can imagine how this would be handy if you were working with a database that contained payroll information, for example.

And at the end of two thousand, despite that drop in stock, the company finished the fiscal years strong with ten point to billion dollars in revenue and earnings at six point three billion dollars. That's the highest in its history at that point. Now, according to Larry Ellison, Oracle was able to save a billion dollars in costs by

using the company's own Oracle E business suite. So he was taking the opportunity to point at Oracle's earnings and say, the reason, or one of the reasons this number is so high is because we use our own products, so you should too, using the company's performance as a commercial for the company's project products. Rather, two thousand one would have even more in revenue, though earnings would actually drop to two point six billion, Still not a bad chunk

of change. I would happily take two point six billion dollars if someone wants to hand it out. Ellison also announced the Oracle nine Eyed database. That was a suite that included the Oracle Real Application Clusters or Oracle R a C, which is sort of a type of grid computing. Now, I mentioned grid computing in some recent episodes, but let me give you a quick rundown on what that means in case you're not familiar. First, let's start with a

basic computer, a single computer. It has a single core processor. Now that architecture works for basic computer problems, but it has limitations. The single core essentially works on problems one operation at a time. Now, you can make this type of computer really fast by beefing up the clock speed on the processor so it can run more operations in the same amount of time. It's just running each operation more quickly than it was before. But for sufficiently complex problems,

this will only speed things up a little bit. Now you also have multi core processors. This is like having a computer that has a couple of different brains, or maybe it has a brain that can multitask and solve more than one set of problems at a time. Multi core processors are great for what we call parallel problems,

sometimes embarrassingly parallel problems. It's actually a technical term. Now, these are a category of computer problems that can be divided into parallel tasks that may be solved at the same time before you get to your ultimate resolution of the problem. So, in other words, it doesn't have to be done sequentially. You can split it up into different parts of the problem. Not all problems fall into that category.

By the way, but a lot of them do. And a multi core processor may be able to solve certain computational problems faster than a single core processor, even if the single core processor has a significantly higher clock speed than the multi core processor does. And I've used this example before, but let's stick with it because I think it works pretty well. Imagine that you've got a classroom. It's filled with math students, and there are eleven students

there total. One of those math students is a true genius. She can solve any math problem faster than anyone else in the class. Now, the other ten are good students, but they take a little longer to get the right answer for any given problem them. One day, the teacher hands out a pop quiz. The genius gets ten math problems to solve. The other ten students get one problem each. So student one gets problem one, Student two gets problem

to the question is who will finish first? Chances are the ten individual students will finish first because each only has to get one answer, while our genius has to finish all ten of the questions. So while she may be faster on an individual basis, when she tackles a problem that can be solved in parallel, the other students have an advantage. So that's the same idea with multi

core processors. Now let's go back to grid computing. Grid computing is a lot like multi core processors, except instead of cores in a processor, we're talking about individual computers. This is a network of computers that can take on

a computational load. With Oracle software, the idea was that a grid of computers could handle the tasks of a more powerful machine, so you could use low cost computers that would work together to act like it was a powerful database server, which would bring operational costs down, and it becomes easy to scale up because you just add

more low cost machines to the grid. This became a popular feature, and upon launch, it was the only database software that could work in computer clusters running on Unix or Windows operating systems. It's a really attractive solution for a lot of database managers, and the reason for that is that if you have a breakdown, it's pretty cheap to fix stuff. Right if you're using low cost computers with relatively low cost off the shelf components. If something fails,

it's easy to get a replacement part. It's easy to swap it out, and it doesn't cost a whole lot, Whereas if you're using a very expensive proprietary system, it could be incredibly costly if something fails and you may

not have a redundant system to back it up. But with low cost solutions, you could actually buy essentially twice as many or maybe even three times as many machines as you need, have redundancy built in, and still overall be operating at a lower cost than you would be if you were using one of those super high end powerful computers. And so we've seen this model being adopted

across multiple industries. This is the same sort of model that Google uses for its various servers, the idea of going with off the shelf components so that you can uh streamline your process. And yeah, it's not as fancy or as fast as your top of the line computers, but when you're looking working at it at a scale, it's the most most efficient method. Plus again, if you want to increase your system's capacity, you just add more computers to it. This works really well for those operations

that can be worked in in parallel. Now, if you're working on something that requires just a really, really fast process sessor and it cannot be broken down into parallel tasks. This approach would not make any sense. So it really depends upon the the applications you have in mind. It doesn't work for everything. All right. That sets the ground for where we're going. Ellison made another grandiose claim in two thousand two and stated that Oracle Database software was

quote unbreakable. Now, what he meant by that was that the security around it was iron clad and that the software had passed fifteen different security evaluations. And they launched a campaign where they referred to this as unbreakable software. But how did that turn out? Well, I'll tell you,

but first let's take a quick break to thank our sponsor. Well, it turns out if you make such a big claim that you're security is unbreakable, you tend to inspire people to test that claim, such as a Scottish entrepreneur named David Litchfield. He's a hacker who wanted to really test this out. He had founded a company called ings Software shortly before Ellison made this big pronouncement, and he decided,

you know what, I'm gonna look at this code. I'm really gonna explore and see if there are in fact, UH no vulnerabilities here if there's no way to exploit it and get access to information that I should not have access to. And Litchfield has been a a participant

in the hacker community for years. He has given numerous presentations about UH software security at various conferences, including the black Hat Conference, and within twenty four hours of deciding he was going to challenge oracles claim on Unbreakable, he said he discovered thirty five flaws in Oracles code that could potential vulnerabilities. According to Lichfield, he contacted Oracle to alert them to those flaws, and he only went public with his findings after he gave the company a chance

to send out software patches to fix the vulnerabilities. He said, well, that didn't happen, And when it didn't happen, I went public because I felt like it forces their hand to go and do something about it. Otherwise they might just sit on it, and then you have these vulnerabilities out in the wild. Litchfield would end up having a long adversarial relationship with Oracle. He frequently would test various builds of Oracle software and would publish vulnerabilities on a regular basis,

often to the constern nation of Oracle. But to be fair, Lichfield was not necessarily advocating the exploitation of those vulnerabilities. Rather, he was calling on Oracle to treat security as a foundation for its software, rather than what he referred to as a goal keeping strategy, where you would just add in a security measure at the end of the development

phase rather than from the beginning. He said, what they're doing is they're trying to paste this security approach on after they've developed everything else, and there's not always a good fit there and a miss stuff as a result. He was saying what they should do is create a secure approach from the very beginning of development and test it throughout the process to make sure that it remained intact.

So that was his argument. In two thousand four, oracles chief security officer Mary Ann Davidson would write a piece for zd net that said hackers like Lichfield where a security threat to Oracle customers, and Lichfield's response was that she should resign from her position and from Oracle, because he said that that was a irresponsible response to what he had done. But I read Davidson's piece because I wanted to make sure I gave everyone a fair ground.

While I was researching this to quically, I tend to side with hackers because there have been plenty of stories of companies that publish software that have critical vulnerabilities in them and then are alerted to those vulnerabilities and then appear to do very little in response to that. And thus the hackers who found the vulnerability say, it's my responsibility to make this public because that will put the pressure on the companies to actually fix the problem or

else they're going to lose customers. That's the argument. The hackers have the approach of, well, if you don't do anything about it, someone's going to take advantage of it. People will get hurt in response. So the only thing I can do, since I can't fix the problem for you, is to let everyone know the problem exists, and then you have to fix it. Well, Davidson wrote a piece and I read it, and, like I said, she made some good points. She mentioned that patching of vulnerability can

take a lot of time. It can take more time than a hacker might assume it takes. She said, it may only take twenty minutes to change a couple of lines of code and everything's fine. But often it takes more than that. It may be a vulnerability that only pertains to one build of the software for a particular operating system or architecture, and if you offer up software for multiple operating systems and architectures, you have to test all of them to find out where this vulnerability exists

and where it may not. So it may mean that you have to take a little more extra time for that. It could take time to patch it and then time to distribute it to your customers. And she argued that hackers who published vulnerabilities are not necessarily motivating companies to fix problems, but rather jumping ahead of a fix that's

on the way now. If you're being generous, you could say, well, that might be the case, and perhaps Litchfield and others of his ilk have unreasonable expectations when it comes to sending out fixes. Maybe there needs to be better communication between the hackers and the companies to say, the companies would respond with, thank you for alerting us to this problem. We will work on it. We have an estimated time of when we think we can get a patch out,

and it is at X time. Maybe at that point everyone's on the same page and you don't have any itchy trigger fingers when it comes to publishing vulnerabilities. But I do think that Litchfield made a very good point in stating that companies like Oracle have a very high bar to meet when it comes to software security due

to the nature of the code that they sell. If your product is meant to hold gigabytes of sensitive information, it better be as secure as you can reasonably expect it to be before you ship it, because it's a guarantee that hackers are going to start poking and prodding to find a weak spot. Davidson, by the way, would remain the chief security officer of Oracle. She still holds that position today, so she did not follow Litchfield's suggestion

that she's resigned from the company. In two thousand three, Oracle launched a new product called Oracle ten G, which was a grid computing product. It really built on that applications cluster they had worked on previously, and now it was more of a distributed database approach. And the company also got involved in something else that took overheadlines, which was an attempt to scoop up a competitor. The competitor

was a company called People soft. People Soft provided financial management software, some supply chain management products, some enterprise performance management software, and stuff like that. Essentially, it was in a very similar business as NetSuite, So if you listen to my net Suite podcast, you kind of getta have a handle for what sort of stuff that company offered clients.

People Soft was in a similar business. On June second, two thousand three, people Soft issue to press release staying that the company was seeking to acquire a smaller software vendor called j D. Edwards that operated in the same space as people Soft, So in other words, they were going to buy up a competitor, but it was a

smaller competitor. On June six of two thousand three, Oracle issued its own press release, so this was just four days later, and they stated that Oracle intended to acquire people Soft and invited the board of people Soft to enter into talks with Oracle, which ruffled some feathers over at the executive level at people Soft. Oracle prepared to hold a hostile takeover of the company. So let's talk about what that means. So you've got different ways where

companies can merge together. There are acquisitions, they're mergers, These are two terms that kind of give you a slightly different uh feeling, right, Like, an acquisition sounds like a larger company buying up a smaller company and then incorporating that company into its operations in some way. A merger sounds more like two companies of similar size and status that merged together to form a new, mega powerful company

pasably able to turn into Voltron. In a hostile takeover, one company goes directly to the shareholders of another company, and the whole purpose is an attempt to gain control of the second company. So in this case, Oracle would essentially go to People's Soft shareholders and say, hey, here's the deal. You've got shares in this company called people Soft. I would like to buy your shares at a slightly

higher price than what they're worth on the market. And that way I can run this company once I get a majority of the shares, because as majority shareholder, I can vote to determine what the company does, and that way I bypass the leadership of people soften entirely because it's a publicly traded company and the company has to respond to shareholders. So all I have to do is get more than fifty of the shares, and if I do that, then I can force votes in people soft

and it essentially becomes my company. And from there I can even move to the point where they agree to be acquired. But people soft headed defense for this, they used what was called a poison pill. Now, poison pills are a category. They're not, It's not just a single thing.

Poison pills are strategies that got popular after a string of hostile takeovers happened in the nineteen eighties was a period of pretty cutthroat business practices, and after the nineteen eighties you started to see hostile takeovers kind of fade away and more mergers and acquisitions happen in the nineties, and poison pills were part of the reason for that. So typically, a poison pill is a measure that kicks in once any single shareholder acquires a particular percentage of

ownership in a company. So for the purposes of this illustration, I'm just going to use the example of thirty percent, but that's a purely hypothetical example. There could be different percentages for different companies. So once that conditions met, as in, once one single shareholder gets hold of thirty percent of all the shares of a company the poison pill activates. Now,

the outcome can take a couple of different forms. One common one is that the company will issue new shares which anyone apart from the entity that now has thirty of the shares can buy at a discount. So, in other words, let's say I'm trying to do a hostile takeover of Disney because somehow I'm rolling in cash and I have started to approach Disney shareholders, and I say, listen, uh, I know that stocks are trading at X amount. I'm ready to buy your shares at why which is higher

than X? And so you'll make a profit on your shares. You'll make more money selling to me than you would if you sold to the market. What do you say? And once that hits, once I get of all those Disney shares, the poison pill jumps in and Disney starts to offer more shares of Disney at a lower price than normal, a discounted price, but only to everyone apart from me I have. Disney does not allow me to

buy shares at that reduced price, only other people. That ends up diluting the shares, ends up making it more difficult for me to get enough shares to actually have a majority. Right by adding more shares, my thirty percent is creeping downward because they're adding more to the overall number. The price is also going down because the market valuation of Disney has to remain the same. You can issue more shares of the company, but the value of the

company does not magically changed. I mean I mentioned this earlier in a previous episode. So if the value of the company is dependent upon the number of shares and the price per share, if you if you increase the number of shares, you reduce the price per share. So suddenly I have a smaller percentage, and it's worth less than it was is when I bought everything, and I'm further away from my goal of getting controlling interest in the company. That is a version of the poison pill strategy.

That's just one. There are other ones. In the case of people Soft, one poison pill strategy was a refund promise the company had made to its customers, so not at shareholders. This was to people Soft customers that may or may not own shares in people Soft. The agreement was that in the event of a hostile takeover enterprise, customers would be guaranteed a refund of two to five times more than whatever the licensing fee they had to

spend was to use People's Soft products. And so essentially what people Soft is saying is, hey, do you do you have a license for our stuff? However much you paid for it, You'll get paid two to five times more than that if there's a hostile takeover, which essentially puts the burden on whichever company takes people Soft over to make good on that promise, So you would start off immediately with a huge payout you would have to

make to all of People's Soft customers. Oracle would sue people Soft over this poison pill, saying that the company was ignoring shareholder desires through such maneuvers, saying, hey, if shareholders want to sell to us, you shouldn't discourage it by having this other measure in place, because then you're hurting your shareholders. People's Soft response was, look, this move is good for our customers, which in the long term means it's good for our shareholders. So things got pretty ugly.

The United States Department of Justice also got into the act. They filed a lawsuit against Oracle, a complaint against them anyway, and stated that if Oracle were to acquire people Soft, it would be in violation of antitrust laws. Effectively, they were saying Oracle would create a monopoly in the market. This was something else that people Soft had suggested was a possible outcome and a reason why Oracle should not

be allowed to take over the company. A federal judge would later throw this case out, stating that the Deparminent of Justice had failed to make its case that they failed to give evidence that this would actually be a violation of antitrust laws. Around that same time, Oracle changed

up the structure of its executive leadership. The company had the CEO and chairman roles combined before, but at this point they decided to split them up, so Ellison would remain the company's CEO and a director of the company, and Jeff Henley became the chairman of the board of directors. After about two years of ugly battles in and out of courts, Oracle eventually acquired people Soft for the princely

sum of about ten point three billion dollars. Afterward, employees of the former people Soft got their first taste of how things were going to change, because Oracle laid off about half of People's Soft workforce, firing around five thousand to six thousand people, so either just less than half or just more than half, because People's had about eleven thousand people working for it when Oracle purchased it, and I saw differing accounts of exactly how many people were

laid off those in the thousands, and it meant that if you worked at people Soft, there was a good chance you weren't going to be there very long, or that half the people around you we're gonna disappear pretty soon. This was part of a larger move by Oracle to reduce its workforce. At that time. The company also released a new version of its database software for free, and they called it Oracle Database ten G Express Edition. This

was in two thousand five. Now. This version of Oracles database software had limitations built in specifically to encourage customers to upgrade to the products Oracle was selling while giving them a sense of what was possible using that software. So it's kind of like breaks being put on the system. They couldn't couldn't do everything that Oracles flagship software what

could do, which makes sense. It was just a way of of sort of marketing to people, as well as offering up a free database solution that did in fact work for smaller scale projects. So if you were not running a big company, you could use this database software effectively all by its own. You didn't have to feel like you needed to upgrade. But for other companies it might just be a way of kind of previewing what Oracle had to offer. In September two thou five, Oracle

announced that it would acquire sebl CRM Systems, Incorporated. This was the company that was founded by former Oracle sales executive Thomas Siebel in the early nineteen nineties. You might remember I mentioned him during the last episode. Seoble had left Oracle in the wake of its sales shake up after that whole issue with how sales was handling things and the incorrect reporting of revenues. The deal was valued at five point eight billion dollars, and it brought Siebel's

customer relationship management software under the umbrella of Oracle. Now. The next couple of years brought your usual updates to Oracle software and a couple more acquisitions. Oracle bought Portal Software for about four forty mill and then spent an equal amount acquiring another company called Stellent. These companies sold billing and revenue management software and enterprise content management products respectively. And that would not be the end of oracles list

of acquisitions. It was actually on a tear and uh, there's a lot more to talk about to kind of bring us up to date to what Oracle is doing today. But before I jump into that, let's take another quick break to thank our sponsor. In two thousand and six, Oracle made another acquisition, purchasing the performance management software company

met to Solve for three point three billion dollars. Oracle continued to grow and diversify its products by incorporating the technology from previous competitors as add on features and software suites. So this reminds me a lot of the story of Comcast actually, where that company managed to compete not by necessarily creating better services and products, but by buying up competitors in various regions. In two thousand seven, Oracle filed

a lawsuit of its own. This case was against a company called s A P a G. S a P is a company with headquarters in Weinheim, Germany, or Weinheim if I'm pronouncing it the proper way for for the Deutsch. Like Oracle, s a P creates enterprise software for big company clients, and it's one of Oracle's main competitors in that space. SAP, by the way, traces its origins to IBM. The founders of SAP worked for IBM before leaving to create their own business. But the lawsuit focused on a

particular branch of s a P called tomorrow Now. That unit would provide customer support to Oracle customers, but at a lower rate than what Oracle charged. Now, remember, Oracle made money not just by selling software, but also by offering ongoing support for a price. So s a P was undercutting Oracle for support services for Oracle's own software. Now, that was not the issue of the lawsuit, right, that

was not illegal. The central problem was that Oracle had detected thousands of illegal downloads of its software and traced them to SAP employees. SAP eventually admitted that, in fact employees had been illegally downloading Oracle software, and initially Oracle sought a reward and excess of a billion dollars, but eventually agreed to a more modest award of three fifty

million dollars. Or so the litigation stretched on for several years before reaching that point, with Larry Ellison himself providing testimony in the case in twenty ten. So this was a huge, huge deal. It was a big, big problem. And uh eventually Oracle ended up coming out on the right side of that one. And and they had a legit complaint because that that software had been illegally downloaded.

Even though it was in the service of something that wasn't illegal, the act of downing that software was illegal. Oracle made a few more acquisitions at that time, including Agile Software Corporation and b e A Systems. The company would state that it viewed acquisitions as sort of a risk free way to invest in research and development because those companies had spent years fine tuning their various products.

So Oracle took advantage of that by bringing those companies into the fold and entering the new parts of the enterprise software industry. As a result, every time it was able to add to its list of services, it suddenly had the opportunity to market to new customers. And it didn't have to do this by starting from scratch. They didn't have to do it all internally. They would find other companies that had already done that groundwork and then

purchase them and bring them in. In two thousand and ten, Oracle made another big move with its bid for Sun Microsystems. Sun was a computer company that primarily sold hardware, although it also had a software component as well. Son had been around since the early nineteen eighties, and the business was built on the back of Unix workstations. The company had previously been in talks with IBM about an acquisition, but in two thousand nine, Oracle and Son announced that

the two companies intended to merge. The process continued until early ten, when the agreement became official, and many of the executives and lead developers over its Son resigned in the wake of the merger, including Tim Bray, who created Extensible Markup Language or XML, and James Gosling, who was the creator of Java. The acquisition meant that Oracle now had the rights to Java. This in turn set the

stage for a lawsuit pitting Oracle against Google. At issue was Google's use of Java a p I S for its Android operating system. So you can kind of think of Java in this sense as being a bunch of different code shortcuts, right, almost like modules and developers would use these modules to help build out applications because it was faster and easier than doing it all from the ground up. So you needed certain basic functionality in your app.

You would grab certain sections of Java and you would chain them together and then add in some of your own code and voila, you get your app. But it meant that you saved a lot of time because you

could use these basic building blocks as part of your foundation. Well, the problem was that all of that stuff in theory at least belong to Oracle now, and the two companies, Google and Oracle couldn't come to a licensing agreement, so Oracle sued Google for copyright infringement, saying, hey, you're using our software are our product without our permission, and you're using it to build uh commercial apps and you're using it for your developers. That's without our permission. That's not cool.

Google had used a programming platform and had built on top of Java functions. So while Google had its own UH developing platform, it did have underlying Java functions powering that. So in the original trial, the judge found that the Java features in question were not protected under copyright. He said, well, your argument can't hold Oracle because these are not copyrighted ideas.

Oracle appealed that decision, and the Court of Appeals reversed part of that earlier decision, saying that the features were certainly copyrightable. So the first judge had made a mistake saying no, you can't copyright these, and the appeals court said no, no, those those are definitely protected by copyright. But the Court of Appeals also gave Google a bit of wiggle rooms, saying that Google might have a viable

fair use defense. Remember, a fair use is this idea that you can actually use material that's under copyright under certain circumstances and meeting certain criteria. But all of that is determined within the court of law. You can't just say fair use and you've got a magic shield that protects you from lawsuits. It's rather you get sued. Then you have to make an argument that your use of the material falls under fair use, and a court has to agree with that. So this really just set up

Google's potential defense. So a second trial took place, and then the jury of that trial decided that Google did uh did in fact use the material out of fair use. So, in other words, again, Oracle loses right. Google gets the exoneration by saying, well, yeah, it was copyrighted material, but

the way you used it is totally fair use. Oracle would file another appeal stating that the decision that this was fair use was based on an incorrect understanding of Java and Google's Android platforms, that it was framed in such a way that sounded like Oracles uh products are meant for PCs and Google's are meant for smartphones. And they said, well, no, there's a lot more stuff in between those two things, and that's where the real problem is.

So in March two thousand eighteen, the U. S. Court of Appeals for the Federal Circuit reversed this decision of the second trial, stating that Google's use of Java A p I S did not constitute fair use and that Oracle was in the right. The case has now been remanded to a lower district court to determine what damages Google owes Oracle, And so the saga continues. Meanwhile, let's jump back to because I mean, that whole story stretch

from twenty to current day. It's still going. But back in the U. S. Department of Justice filed a complaint against Oracle alleging the company had committed contract fraud. The Department of Justice accused Oracle of defrauding the United States government on a General Services Administration software contract that started in nine and concluded in two thousand six. Now, according to this complaint, Oracle had agreed to offer government offices

the best discounts it offered to non government customers. So, in other words, they said, whatever the lowest price is that we're offering, governments will get access to that lowest price. If it's a special that we're running, then governments will have that as the standard fee for our services, and whatever the best possible prices, the government will be able to take advantage of that. So the complain alleged that Oracle had failed to do this, and that thus government

offices were overpaying for Oracle products and services. According to the agreement, that there were commercial deals with some of Oracle's customers that were below the fee that government offices were paying for those same services and same products. In two thousand eleven, Oracle agreed to pay out nearly two hundred million dollars plus interest to settle those charges, and then again in twousd ten that was the year that Ellison would bring in Mark Heard to replace Charles Phillips.

Phillips had been serving as Oracles president at that time. Phillips had led the come during that period of acquisitions and became co president after only six months of working at Oracle back in two thousand three. But in a string of things happened that really put Phillips on the defense. First of all, a woman revealed that she and Phillips had been involved in an extramarital affair for eight years.

Phillips had been married for thirty years, and this girl friend of his had paid thousands of dollars to put up billboard ads revealing the relationship, saying she had entered into it under the understanding that Phillips was separated from

his wife, which was not the case. Phillips had later made a statement that Oracle planned to spend about seventy billion dollars and acquisitions over the next five years, which the company later denied and said, no, we don't have a budget, says side for acquisitions for the next five years. Seventy billion dollars was a number that Phillips just kind

of uh invented. This is what the company was saying because shareholders were react ding in the alarm that a company was spending planning to spend seventy billion dollars over the course of five years. So both of those things, his personal life and this particular announcement gave his reputational damage, and he was out and replaced by the former CEO of Hewitt Packard, a man named Mark Heard. Now Heard

himself was also the center of a scandal. He was actually ousted as CEO of HP after an actress named Jody Fisher accused him of sexual harassment. Fisher had worked with HP to coordinate and host events on behalf of

the company. She would appear at these HP events, and Mark Heard was frequently there as well, and she alleged that Heard had behaved inappropriately toward her, using his position as a means to try to manipulate her into a physical relationship, although she said no physical relationship ever actually developed. She employed a year named Gloria Allred, who sent a letter to HP filled with the accusations that Fisher had against herd Heard was ousted as CEO of HP kind

of In response, Ellison criticized this move. He said that HP was crazy to fire Herd, and so he then went on to hire Herd to help lead Oracle. This, in turn, would make headlines. HP would later state than an internal investigation cleared heard of the harassment accusations, but that he had filed inaccurate expense reports in order to hide this relationship from the company, and that it was these these false expense reports that really led to his

dismissal as CEO. Fisher stated that she and Herd had settled the matter out of court and without litigation. A little bit later, in September, a report revealed that Larry Ellison had received a compensation package of nearly seventies seven million dollars for the previous fiscal year. That's a pretty

huge salary, even for a CEO. In fact, a lot of CEOs get relatively modest salaries compared to other executives because their compensation largely ends up being tied with the profitability of the company, so their bonuses end up being through the roof if the company is doing well, but otherwise they have still huge salaries, typically way more than what most people make, but not anywhere close to seventy seven million dollars, and that that fact had some shareholders

a little concerned that Larry Elson was making that much money. In two thousand fourteen, Oracle issued a press release staying that Larry Ellison was transitioning to a new role. He was no longer going to be CEO. He was stepping down, but he was not retiring despite being in his seventies. He would serve as Chairman of the board and chief

Technology Officer for Oracle. Jeff Henley, who was the previous chairman of the board, was sort of demoted to the position of vice chairman, and the new CEO of Oracle was actually two people. It wasn't a single CEO. They were not called co CEOs either, just CEOs, and these are the same two people who are CEOs of Oracle to this day. Those two people were soft Ra Cats, the person who had worked with Ellison years before as sort of the the mouthpiece between Ellison and other important

leaders over at Oracle and Mark heard. Cats would oversee sales, Herd's area would be business and service units, and Ellison would oversee software and engineering. So yet again Oracle would come under the direction of a triumvirate. This is very similar to when Lane and Henley and Ellison would lead the company in the nineties. The collective compensation for Ellison, Cats and Heard, if you added it all up in two thousand thirteen, was a hundred sixties six million dollars. Yikes,

adds a lot of cheddar. In two thousand and sixteen, Oracle would acquire net Suite, which, as I mentioned earlier, had received initial funding from Ellison almost two decades before that. Net Suite added more features geared toward midsized companies, while most of Oracle's products were aiming at larger enterprises. But I did a whole episode of NetSuite just a few episodes ago, so we're not going to retread that. And

Oracle continues to offer up a ton of products. It's core still being database services, although there's been a lot of articles recently saying that that business is slowly starting to fade from prominence. But Oracle also offers up a ton of these web enabled services that allow companies to offload a lot of their back end processes onto these web software packages, and that means that they still have kind of an ongoing subscription based business that's an ongoing

way of generating revenue. And even if the database industry ends up fading from prominence. They have this other business that they've been really right there at the leading edge of it since the beginning effect in front of the leading edge, and in some cases where the company failed to really capitalize on it because the world just wasn't ready yet. But now that seems to be the way a lot of companies are going, So Oracles still in

pretty good position. It just may mean that the core of their business might shift from the database side to this web enabled services side. I may do an episode dedicated solely to Larry Ellison in the future, as his story, while tightly coupled with Oracle, I've covered a lot of it in these episodes. There's still a lot more twists and turns in his story, including his launch of a hydroponics company and his tendency to buy islands. It's kind of cool not to mention his his various yacht racing

activities and other things. Also, Larry Ellison wanted at one point to be the guy to put Steve Jobs back in charge of Apple. Ellison had a lot of uh still does have. He has a lot of really powerful friends in the text sphere, and Steve Jobs was one of them. And Ellison had thought that Job's got a raw deal from Apple back in the day and he

wanted to put Jobs back in charge. Of course that did happen, not necessarily with Ellison's direct involvement, but that is sort of how things unfolded when Apple's board of directors decided to give Steve Jobs the interim CEO job before he actually assumed the formal CEO position a little bit later. So there's a lot of stuff about Ellison that I could cover that is, uh, not directly tied in with his work with Oracle, but still very important in the world of technology. So I may do that

in a future episode. But I want to ask you, guys, what do you what do you want me to cover? Like, what's what sort of topics would you be interested in hearing more about. Whether it's a technology, maybe it's a company. Maybe it's a person in tech who you would like to hear more about. Maybe there's someone you would like me to enter view or have on as a guest host to talk about the topic. Send me a message.

My email address for this show is tech Stuff at how stuff works dot com, or you can drop me a line on Facebook or Twitter. The handle of both of those is tech Stuff hs W. Remember we've gotten Instagram accounts, so go over to Instagram and follow us to see the behind the scenes stuff and other interesting things that Crystal is always posting over there. And I often will stream live my recording sessions of podcasts. I do it at twitch dot tv slash tech Stuff, So

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