August 16, 2010

What Goes Around Comes Around to Google (AAPL, GOOG, MSFT, ORCL)

What Goes Around Comes Around to Google

Anders Bylund

August 13, 2010

Way back in 2007, when Sun Microsystems was still a stand-alone business and Android a mere glimmer in Google's (Nasdaq: GOOG) eye, Sun had a problem with the way Android built on the Java software platform.

The problem was fragmentation: Android doesn't run bog-standard Java code, but instead translates programs written for that platform into its own format, which is then executed by the Dalvik virtual machine that is the cold, robotic heart of any Android gadget. At the time, Google waved away the objections like Obi-Wan waving his droids through a storm trooper checkpoint: Android is part of the solution to Java fragmentation, not the problem -- Sun should love Google for replacing Java with its own far-reaching standard. Sun never made any official stink about it again, even though Google's reaction smelled like the insides of a dead tauntaun.

Until now, that is. Sun parent Oracle (Nasdaq: ORCL) is now suing Google for patent infringement, claiming that: "In developing Android, Google knowingly, directly and repeatedly infringed Oracle's Java-related intellectual property." Oracle is looking for treble damages ("triple" in legalese, not the other half of "treble and bass") and wants to stop Google from shipping, selling, or promoting Android. That would certainly hurt Google.

This lawsuit was a bit of a shock to me, because I assumed that Google had made the problem go away by some sort of proactive action. But the legal complaint states in no uncertain terms that Google lacks the licenses required to use Java in this way.

This case echoes of a long-running action Sun carried out against Microsoft (Nasdaq: MSFT) last decade over strikingly similar problems. Mr. Softy ended up paying $1 billion in damages for that one, and Oracle would probably love a settlement of that scale again.

I'm guessing here, but it would make sense for Google to settle this affair quickly and quietly -- pay up a license fee for the right to use and modify the Java platform and then go on with business as usual. There is an alternative development framework available for Android programmers, based on the much more bare-metal C/C++ programming language. Going to that model exclusively would require hordes of Android developers to learn a new and arguably more difficult language. That would be a serious roadblock in the race to outgrow the Apple (Nasdaq: AAPL) iPhone store in application quantity.

Java has been released under an open-source license after all -- excluding the mobile version. Oracle's stock is falling harder than Google's today. Are investors worried that Oracle alienates its own worldwide developer base here by raising thorny and nearly forgotten licensing issues? Discuss in the comments box below.

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What Goes Around Comes Around to Google (AAPL, GOOG, MSFT, ORCL)

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