1 00:00:04,160 --> 00:00:07,160 Speaker 1: Get in touch with technology with tech Stuff from how 2 00:00:07,240 --> 00:00:13,840 Speaker 1: stuff works dot com. Hey Lere, and welcome to tech Stuff. 3 00:00:13,880 --> 00:00:16,760 Speaker 1: I'm your host Jonathan Strickland. I'm an executive producer with 4 00:00:16,880 --> 00:00:20,400 Speaker 1: how Stuff Works and I love all things tech. And 5 00:00:20,520 --> 00:00:22,680 Speaker 1: at the end of our last episode, we left off 6 00:00:22,720 --> 00:00:26,439 Speaker 1: with Oracle in the year two thousand, Larry Ellison, a 7 00:00:26,560 --> 00:00:30,600 Speaker 1: co founder of the company, had just decided to consolidate power, 8 00:00:30,720 --> 00:00:35,319 Speaker 1: and according to former Oracle president Raymond Lane, stripped him 9 00:00:35,320 --> 00:00:38,320 Speaker 1: of all authority from the role of president in order 10 00:00:38,360 --> 00:00:42,160 Speaker 1: to convince Lane to resign. So that's what Lane did, 11 00:00:42,600 --> 00:00:45,440 Speaker 1: and Oracle stock took a little bump and reviews. The 12 00:00:45,440 --> 00:00:48,600 Speaker 1: most recent software for Oracle at the time, We're mixed 13 00:00:48,760 --> 00:00:52,840 Speaker 1: at best. Oracle had also failed to capitalize on Larry 14 00:00:52,840 --> 00:00:57,480 Speaker 1: Ellison's grand plan to transform computing by boarding everything over 15 00:00:57,520 --> 00:01:00,600 Speaker 1: to a web based approach. He had hoped to introduced 16 00:01:00,760 --> 00:01:04,560 Speaker 1: network computers, which were essentially stripped down PCs that have 17 00:01:04,680 --> 00:01:07,120 Speaker 1: very few bells and whistles. They didn't even have a 18 00:01:07,160 --> 00:01:10,319 Speaker 1: hard drive, which would have brought the price down to 19 00:01:10,360 --> 00:01:14,240 Speaker 1: about five dollars per unit, so that would be the 20 00:01:14,280 --> 00:01:17,600 Speaker 1: attractive factor there. All the software and storage that you 21 00:01:17,600 --> 00:01:21,280 Speaker 1: would need for your Your computer would actually be accessed 22 00:01:21,280 --> 00:01:23,240 Speaker 1: over the Internet, so all you had to have was 23 00:01:23,280 --> 00:01:26,360 Speaker 1: a persistent Internet connection. Again, this is sort of like 24 00:01:26,440 --> 00:01:29,080 Speaker 1: going back to the old mainframe days where you would 25 00:01:29,160 --> 00:01:32,319 Speaker 1: use a dumb computer terminal to access the power of 26 00:01:32,319 --> 00:01:35,399 Speaker 1: the main frame, except instead of a mainframe, your accessing 27 00:01:35,680 --> 00:01:38,280 Speaker 1: servers on the Internet. He was ahead of the curve 28 00:01:38,360 --> 00:01:41,919 Speaker 1: on that one, and the experience uh that Oracle actually 29 00:01:42,000 --> 00:01:45,480 Speaker 1: delivered ended up falling short of the promises that he 30 00:01:45,520 --> 00:01:48,400 Speaker 1: had been making, something he actually apologized for at the 31 00:01:48,440 --> 00:01:51,840 Speaker 1: press conference in and it took a few years, but 32 00:01:51,960 --> 00:01:54,720 Speaker 1: later on we would actually see computers similar to the 33 00:01:54,760 --> 00:01:58,280 Speaker 1: network computer concept hit the market, with stuff like chromebooks, 34 00:01:58,360 --> 00:02:01,240 Speaker 1: for example. This was also right around the time that 35 00:02:01,320 --> 00:02:04,960 Speaker 1: the dot com bubble was collapsing. Startup companies that seemed 36 00:02:05,000 --> 00:02:08,639 Speaker 1: to be destined for greatness were fizzling out left and right. 37 00:02:09,040 --> 00:02:13,040 Speaker 1: Oracle was better established and wasn't solely reliant upon web 38 00:02:13,080 --> 00:02:16,360 Speaker 1: oriented businesses, and it was able to get through the turmoil, 39 00:02:16,600 --> 00:02:19,960 Speaker 1: as did both net Suite and salesforce dot Com, which 40 00:02:19,960 --> 00:02:24,200 Speaker 1: were two web based ventures that had been launched by 41 00:02:24,280 --> 00:02:28,000 Speaker 1: former Oracle employees. They were also two ventures that Larry 42 00:02:28,040 --> 00:02:31,400 Speaker 1: Ellison had helped fund a couple of years earlier. So 43 00:02:31,440 --> 00:02:33,359 Speaker 1: all three of those managed to get through the dot 44 00:02:33,400 --> 00:02:36,360 Speaker 1: com bubble collapse, but a lot of other companies weren't 45 00:02:36,400 --> 00:02:39,000 Speaker 1: so fortunate. Oh and there was another thing that happened 46 00:02:39,000 --> 00:02:41,760 Speaker 1: in two thousand. There was an event called trash Gate. 47 00:02:42,040 --> 00:02:44,880 Speaker 1: At least later on it was dubbed that. Let me 48 00:02:45,240 --> 00:02:47,520 Speaker 1: set the grounds for this because it's kind of a 49 00:02:47,639 --> 00:02:51,680 Speaker 1: juicy scandal. So Oracle's arch enemy in the market was 50 00:02:51,720 --> 00:02:56,760 Speaker 1: always Microsoft. Microsoft was the number one largest software company 51 00:02:56,800 --> 00:02:59,480 Speaker 1: in the world, and Ellison always wanted Oracle to overtake it, 52 00:03:00,120 --> 00:03:02,280 Speaker 1: and he was always pushing for that to to take 53 00:03:02,320 --> 00:03:05,519 Speaker 1: that spot away from Bill Gates's company. Not at the time, 54 00:03:05,960 --> 00:03:09,920 Speaker 1: Microsoft was in the middle of a massive antitrust lawsuit. 55 00:03:10,200 --> 00:03:13,000 Speaker 1: I'll probably do an episode at some point to really 56 00:03:13,040 --> 00:03:15,919 Speaker 1: dive into that lawsuit in detail and explain what what 57 00:03:16,000 --> 00:03:18,960 Speaker 1: was happening and why it was important. But anyway, the 58 00:03:19,000 --> 00:03:24,280 Speaker 1: important thing was that Microsoft was financially funding several groups 59 00:03:24,320 --> 00:03:28,280 Speaker 1: that were lobbying on the company's behalf, and Oracle wanted 60 00:03:28,320 --> 00:03:31,679 Speaker 1: to do some investigation here and try to kind of 61 00:03:32,720 --> 00:03:37,840 Speaker 1: uh counteract these groups influence on the outcome of this 62 00:03:37,960 --> 00:03:42,360 Speaker 1: antitrust lawsuits, so they hired an investigative firm to look 63 00:03:42,360 --> 00:03:45,680 Speaker 1: into those groups, and the efforts went so far as 64 00:03:45,720 --> 00:03:48,560 Speaker 1: to offer up essentially a reward for handing over the 65 00:03:48,600 --> 00:03:51,360 Speaker 1: contents of waste paper baskets to see if there were 66 00:03:51,400 --> 00:03:54,000 Speaker 1: any evidence there the groups were working to influence the 67 00:03:54,000 --> 00:03:58,119 Speaker 1: outcome of the case, thus the term trash gate. Now 68 00:03:58,160 --> 00:04:02,720 Speaker 1: that didn't reflect well on either Microsoft or Oracle. Oracles 69 00:04:02,760 --> 00:04:05,400 Speaker 1: accusations that Microsoft was using these groups in a way 70 00:04:05,440 --> 00:04:08,720 Speaker 1: to try and get a better outcome for this antitrust lawsuit, 71 00:04:08,880 --> 00:04:12,280 Speaker 1: that's not great. But then Oracle also wallowing in the 72 00:04:12,320 --> 00:04:15,080 Speaker 1: garbage of another company in order to look for evidence, 73 00:04:15,160 --> 00:04:17,720 Speaker 1: some dirt to dig up on them. That didn't look 74 00:04:17,760 --> 00:04:21,440 Speaker 1: great either. Ellison would argue that the actions were entirely legal. 75 00:04:21,880 --> 00:04:25,200 Speaker 1: Maybe not ethical, but they were legal, although you could 76 00:04:25,279 --> 00:04:29,039 Speaker 1: argue that nobody really came out of that looking too great. 77 00:04:29,400 --> 00:04:33,440 Speaker 1: But despite all of these things, despite the controversy, despite 78 00:04:33,480 --> 00:04:36,560 Speaker 1: the bump in the stock price, despite all of that, 79 00:04:36,760 --> 00:04:39,200 Speaker 1: the company was still in a strong position, much better 80 00:04:39,240 --> 00:04:41,440 Speaker 1: than it had been a decade earlier in the early 81 00:04:41,520 --> 00:04:44,840 Speaker 1: nine nineties when things were not so certain. So let's 82 00:04:44,920 --> 00:04:48,200 Speaker 1: learn about what has happened with Oracle since two thousand 83 00:04:48,320 --> 00:04:50,800 Speaker 1: and where it is today. One other thing that I 84 00:04:50,839 --> 00:04:53,000 Speaker 1: have to cover that did happen in two thousand was 85 00:04:53,040 --> 00:04:57,120 Speaker 1: that Oracle partnered with a Texas based company called Entrust 86 00:04:57,279 --> 00:05:03,040 Speaker 1: Technologies Incorporated on a project named Oracle Advanced Security. Now. 87 00:05:03,080 --> 00:05:06,400 Speaker 1: This was meant to combine database technology with strong encryption 88 00:05:06,440 --> 00:05:10,279 Speaker 1: and authentication tools to better protect data from hackers. The 89 00:05:10,320 --> 00:05:13,480 Speaker 1: project would become an add on feature for Oracle Database 90 00:05:13,640 --> 00:05:16,880 Speaker 1: Enterprise Edition. Today's version of this includes the ability for 91 00:05:16,920 --> 00:05:20,880 Speaker 1: administrators to mask specific parts of a database so that 92 00:05:21,080 --> 00:05:26,039 Speaker 1: only authorized users can view those sections. Unauthorized users won't 93 00:05:26,040 --> 00:05:27,719 Speaker 1: be able to see those sections, but they would still 94 00:05:27,760 --> 00:05:30,280 Speaker 1: be able to see other ones, which comes in handy 95 00:05:30,320 --> 00:05:32,719 Speaker 1: if you want people to work with databases that contain 96 00:05:32,800 --> 00:05:35,480 Speaker 1: sense the material that they really shouldn't see. They can 97 00:05:35,520 --> 00:05:37,760 Speaker 1: still do their work in the sections of the database 98 00:05:37,800 --> 00:05:40,280 Speaker 1: they are authorized to use, and the bits they're not 99 00:05:40,320 --> 00:05:42,560 Speaker 1: supposed to see will just remain hidden from view. So 100 00:05:42,600 --> 00:05:44,640 Speaker 1: you can imagine how this would be handy if you 101 00:05:44,680 --> 00:05:48,359 Speaker 1: were working with a database that contained payroll information, for example. 102 00:05:49,160 --> 00:05:51,880 Speaker 1: And at the end of two thousand, despite that drop 103 00:05:51,880 --> 00:05:54,919 Speaker 1: in stock, the company finished the fiscal years strong with 104 00:05:55,000 --> 00:05:58,560 Speaker 1: ten point to billion dollars in revenue and earnings at 105 00:05:58,600 --> 00:06:01,599 Speaker 1: six point three billion dollars. That's the highest in its 106 00:06:01,680 --> 00:06:05,039 Speaker 1: history at that point. Now, according to Larry Ellison, Oracle 107 00:06:05,120 --> 00:06:08,120 Speaker 1: was able to save a billion dollars in costs by 108 00:06:08,200 --> 00:06:11,800 Speaker 1: using the company's own Oracle E business suite. So he 109 00:06:11,880 --> 00:06:15,279 Speaker 1: was taking the opportunity to point at Oracle's earnings and say, 110 00:06:15,320 --> 00:06:17,560 Speaker 1: the reason, or one of the reasons this number is 111 00:06:17,560 --> 00:06:20,240 Speaker 1: so high is because we use our own products, so 112 00:06:20,360 --> 00:06:25,120 Speaker 1: you should too, using the company's performance as a commercial 113 00:06:25,160 --> 00:06:29,200 Speaker 1: for the company's project products. Rather, two thousand one would 114 00:06:29,240 --> 00:06:32,520 Speaker 1: have even more in revenue, though earnings would actually drop 115 00:06:32,640 --> 00:06:36,680 Speaker 1: to two point six billion, Still not a bad chunk 116 00:06:36,720 --> 00:06:39,760 Speaker 1: of change. I would happily take two point six billion 117 00:06:39,800 --> 00:06:43,200 Speaker 1: dollars if someone wants to hand it out. Ellison also 118 00:06:43,240 --> 00:06:46,320 Speaker 1: announced the Oracle nine Eyed database. That was a suite 119 00:06:46,360 --> 00:06:50,120 Speaker 1: that included the Oracle Real Application Clusters or Oracle R 120 00:06:50,200 --> 00:06:53,960 Speaker 1: a C, which is sort of a type of grid computing. Now, 121 00:06:54,000 --> 00:06:57,120 Speaker 1: I mentioned grid computing in some recent episodes, but let 122 00:06:57,120 --> 00:07:00,239 Speaker 1: me give you a quick rundown on what that means 123 00:07:00,279 --> 00:07:03,240 Speaker 1: in case you're not familiar. First, let's start with a 124 00:07:03,279 --> 00:07:08,040 Speaker 1: basic computer, a single computer. It has a single core processor. 125 00:07:08,839 --> 00:07:12,480 Speaker 1: Now that architecture works for basic computer problems, but it 126 00:07:12,560 --> 00:07:17,240 Speaker 1: has limitations. The single core essentially works on problems one 127 00:07:17,320 --> 00:07:20,080 Speaker 1: operation at a time. Now, you can make this type 128 00:07:20,080 --> 00:07:22,920 Speaker 1: of computer really fast by beefing up the clock speed 129 00:07:22,960 --> 00:07:25,960 Speaker 1: on the processor so it can run more operations in 130 00:07:26,000 --> 00:07:28,880 Speaker 1: the same amount of time. It's just running each operation 131 00:07:28,920 --> 00:07:33,440 Speaker 1: more quickly than it was before. But for sufficiently complex problems, 132 00:07:33,440 --> 00:07:36,640 Speaker 1: this will only speed things up a little bit. Now 133 00:07:36,840 --> 00:07:40,440 Speaker 1: you also have multi core processors. This is like having 134 00:07:40,480 --> 00:07:43,480 Speaker 1: a computer that has a couple of different brains, or 135 00:07:43,520 --> 00:07:46,000 Speaker 1: maybe it has a brain that can multitask and solve 136 00:07:46,040 --> 00:07:48,960 Speaker 1: more than one set of problems at a time. Multi 137 00:07:48,960 --> 00:07:52,720 Speaker 1: core processors are great for what we call parallel problems, 138 00:07:52,760 --> 00:07:57,560 Speaker 1: sometimes embarrassingly parallel problems. It's actually a technical term. Now, 139 00:07:57,560 --> 00:08:00,440 Speaker 1: these are a category of computer problems that can be 140 00:08:00,480 --> 00:08:03,960 Speaker 1: divided into parallel tasks that may be solved at the 141 00:08:04,040 --> 00:08:07,400 Speaker 1: same time before you get to your ultimate resolution of 142 00:08:07,440 --> 00:08:09,240 Speaker 1: the problem. So, in other words, it doesn't have to 143 00:08:09,240 --> 00:08:12,760 Speaker 1: be done sequentially. You can split it up into different 144 00:08:13,120 --> 00:08:16,880 Speaker 1: parts of the problem. Not all problems fall into that category. 145 00:08:16,920 --> 00:08:18,920 Speaker 1: By the way, but a lot of them do. And 146 00:08:18,920 --> 00:08:21,800 Speaker 1: a multi core processor may be able to solve certain 147 00:08:21,840 --> 00:08:26,560 Speaker 1: computational problems faster than a single core processor, even if 148 00:08:26,600 --> 00:08:30,640 Speaker 1: the single core processor has a significantly higher clock speed 149 00:08:30,880 --> 00:08:33,720 Speaker 1: than the multi core processor does. And I've used this 150 00:08:33,800 --> 00:08:36,880 Speaker 1: example before, but let's stick with it because I think 151 00:08:36,920 --> 00:08:41,440 Speaker 1: it works pretty well. Imagine that you've got a classroom. 152 00:08:41,480 --> 00:08:45,400 Speaker 1: It's filled with math students, and there are eleven students 153 00:08:45,440 --> 00:08:49,880 Speaker 1: there total. One of those math students is a true genius. 154 00:08:50,040 --> 00:08:53,000 Speaker 1: She can solve any math problem faster than anyone else 155 00:08:53,000 --> 00:08:56,240 Speaker 1: in the class. Now, the other ten are good students, 156 00:08:56,360 --> 00:08:58,640 Speaker 1: but they take a little longer to get the right 157 00:08:58,679 --> 00:09:01,880 Speaker 1: answer for any given problem them. One day, the teacher 158 00:09:01,920 --> 00:09:05,440 Speaker 1: hands out a pop quiz. The genius gets ten math 159 00:09:05,520 --> 00:09:10,000 Speaker 1: problems to solve. The other ten students get one problem each. 160 00:09:10,200 --> 00:09:13,080 Speaker 1: So student one gets problem one, Student two gets problem 161 00:09:13,160 --> 00:09:17,280 Speaker 1: to the question is who will finish first? Chances are 162 00:09:17,559 --> 00:09:21,480 Speaker 1: the ten individual students will finish first because each only 163 00:09:21,559 --> 00:09:24,720 Speaker 1: has to get one answer, while our genius has to 164 00:09:24,760 --> 00:09:28,160 Speaker 1: finish all ten of the questions. So while she may 165 00:09:28,200 --> 00:09:31,280 Speaker 1: be faster on an individual basis, when she tackles a 166 00:09:31,280 --> 00:09:34,600 Speaker 1: problem that can be solved in parallel, the other students 167 00:09:34,640 --> 00:09:38,480 Speaker 1: have an advantage. So that's the same idea with multi 168 00:09:38,559 --> 00:09:43,280 Speaker 1: core processors. Now let's go back to grid computing. Grid 169 00:09:43,320 --> 00:09:48,360 Speaker 1: computing is a lot like multi core processors, except instead 170 00:09:48,400 --> 00:09:53,400 Speaker 1: of cores in a processor, we're talking about individual computers. 171 00:09:53,840 --> 00:09:56,120 Speaker 1: This is a network of computers that can take on 172 00:09:56,200 --> 00:10:00,160 Speaker 1: a computational load. With Oracle software, the idea was that 173 00:10:00,200 --> 00:10:02,679 Speaker 1: a grid of computers could handle the tasks of a 174 00:10:02,720 --> 00:10:06,319 Speaker 1: more powerful machine, so you could use low cost computers 175 00:10:06,360 --> 00:10:09,000 Speaker 1: that would work together to act like it was a 176 00:10:09,040 --> 00:10:13,400 Speaker 1: powerful database server, which would bring operational costs down, and 177 00:10:13,440 --> 00:10:15,640 Speaker 1: it becomes easy to scale up because you just add 178 00:10:15,679 --> 00:10:19,079 Speaker 1: more low cost machines to the grid. This became a 179 00:10:19,120 --> 00:10:21,960 Speaker 1: popular feature, and upon launch, it was the only database 180 00:10:22,000 --> 00:10:25,040 Speaker 1: software that could work in computer clusters running on Unix 181 00:10:25,160 --> 00:10:28,840 Speaker 1: or Windows operating systems. It's a really attractive solution for 182 00:10:28,880 --> 00:10:31,400 Speaker 1: a lot of database managers, and the reason for that 183 00:10:31,880 --> 00:10:35,000 Speaker 1: is that if you have a breakdown, it's pretty cheap 184 00:10:35,040 --> 00:10:38,439 Speaker 1: to fix stuff. Right if you're using low cost computers 185 00:10:38,440 --> 00:10:42,520 Speaker 1: with relatively low cost off the shelf components. If something fails, 186 00:10:42,760 --> 00:10:46,160 Speaker 1: it's easy to get a replacement part. It's easy to 187 00:10:46,200 --> 00:10:48,520 Speaker 1: swap it out, and it doesn't cost a whole lot, 188 00:10:48,600 --> 00:10:53,760 Speaker 1: Whereas if you're using a very expensive proprietary system, it 189 00:10:53,800 --> 00:10:58,120 Speaker 1: could be incredibly costly if something fails and you may 190 00:10:58,120 --> 00:11:00,520 Speaker 1: not have a redundant system to back it up. But 191 00:11:00,600 --> 00:11:05,440 Speaker 1: with low cost solutions, you could actually buy essentially twice 192 00:11:05,440 --> 00:11:08,000 Speaker 1: as many or maybe even three times as many machines 193 00:11:08,040 --> 00:11:11,640 Speaker 1: as you need, have redundancy built in, and still overall 194 00:11:11,679 --> 00:11:13,880 Speaker 1: be operating at a lower cost than you would be 195 00:11:13,920 --> 00:11:15,720 Speaker 1: if you were using one of those super high end 196 00:11:15,800 --> 00:11:20,040 Speaker 1: powerful computers. And so we've seen this model being adopted 197 00:11:20,080 --> 00:11:23,000 Speaker 1: across multiple industries. This is the same sort of model 198 00:11:23,040 --> 00:11:26,760 Speaker 1: that Google uses for its various servers, the idea of 199 00:11:26,800 --> 00:11:30,120 Speaker 1: going with off the shelf components so that you can 200 00:11:30,400 --> 00:11:34,720 Speaker 1: uh streamline your process. And yeah, it's not as fancy 201 00:11:34,920 --> 00:11:37,680 Speaker 1: or as fast as your top of the line computers, 202 00:11:38,240 --> 00:11:40,920 Speaker 1: but when you're looking working at it at a scale, 203 00:11:41,480 --> 00:11:45,400 Speaker 1: it's the most most efficient method. Plus again, if you 204 00:11:45,440 --> 00:11:49,199 Speaker 1: want to increase your system's capacity, you just add more 205 00:11:49,280 --> 00:11:54,040 Speaker 1: computers to it. This works really well for those operations 206 00:11:54,080 --> 00:11:57,079 Speaker 1: that can be worked in in parallel. Now, if you're 207 00:11:57,120 --> 00:11:59,640 Speaker 1: working on something that requires just a really, really fast 208 00:11:59,679 --> 00:12:03,760 Speaker 1: process sessor and it cannot be broken down into parallel tasks. 209 00:12:04,160 --> 00:12:07,120 Speaker 1: This approach would not make any sense. So it really 210 00:12:07,160 --> 00:12:11,200 Speaker 1: depends upon the the applications you have in mind. It 211 00:12:11,240 --> 00:12:15,840 Speaker 1: doesn't work for everything. All right. That sets the ground 212 00:12:16,200 --> 00:12:20,040 Speaker 1: for where we're going. Ellison made another grandiose claim in 213 00:12:20,080 --> 00:12:23,760 Speaker 1: two thousand two and stated that Oracle Database software was 214 00:12:23,960 --> 00:12:27,360 Speaker 1: quote unbreakable. Now, what he meant by that was that 215 00:12:27,400 --> 00:12:30,640 Speaker 1: the security around it was iron clad and that the 216 00:12:30,679 --> 00:12:35,640 Speaker 1: software had passed fifteen different security evaluations. And they launched 217 00:12:35,640 --> 00:12:40,319 Speaker 1: a campaign where they referred to this as unbreakable software. 218 00:12:40,480 --> 00:12:43,199 Speaker 1: But how did that turn out? Well, I'll tell you, 219 00:12:43,600 --> 00:12:54,400 Speaker 1: but first let's take a quick break to thank our sponsor. Well, 220 00:12:54,480 --> 00:12:56,719 Speaker 1: it turns out if you make such a big claim 221 00:12:56,760 --> 00:13:02,559 Speaker 1: that you're security is unbreakable, you tend to inspire people 222 00:13:02,600 --> 00:13:07,640 Speaker 1: to test that claim, such as a Scottish entrepreneur named 223 00:13:07,840 --> 00:13:12,120 Speaker 1: David Litchfield. He's a hacker who wanted to really test 224 00:13:12,200 --> 00:13:16,040 Speaker 1: this out. He had founded a company called ings Software 225 00:13:16,120 --> 00:13:19,840 Speaker 1: shortly before Ellison made this big pronouncement, and he decided, 226 00:13:19,920 --> 00:13:21,640 Speaker 1: you know what, I'm gonna look at this code. I'm 227 00:13:21,640 --> 00:13:24,559 Speaker 1: really gonna explore and see if there are in fact, 228 00:13:25,080 --> 00:13:28,199 Speaker 1: UH no vulnerabilities here if there's no way to exploit 229 00:13:28,240 --> 00:13:30,840 Speaker 1: it and get access to information that I should not 230 00:13:30,960 --> 00:13:36,680 Speaker 1: have access to. And Litchfield has been a a participant 231 00:13:36,920 --> 00:13:40,080 Speaker 1: in the hacker community for years. He has given numerous 232 00:13:40,120 --> 00:13:46,440 Speaker 1: presentations about UH software security at various conferences, including the 233 00:13:46,480 --> 00:13:51,280 Speaker 1: black Hat Conference, and within twenty four hours of deciding 234 00:13:51,280 --> 00:13:55,560 Speaker 1: he was going to challenge oracles claim on Unbreakable, he 235 00:13:55,760 --> 00:13:59,719 Speaker 1: said he discovered thirty five flaws in Oracles code that 236 00:13:59,720 --> 00:14:04,280 Speaker 1: could potential vulnerabilities. According to Lichfield, he contacted Oracle to 237 00:14:04,320 --> 00:14:07,079 Speaker 1: alert them to those flaws, and he only went public 238 00:14:07,440 --> 00:14:10,840 Speaker 1: with his findings after he gave the company a chance 239 00:14:10,880 --> 00:14:14,720 Speaker 1: to send out software patches to fix the vulnerabilities. He said, well, 240 00:14:14,720 --> 00:14:16,960 Speaker 1: that didn't happen, And when it didn't happen, I went 241 00:14:17,000 --> 00:14:20,200 Speaker 1: public because I felt like it forces their hand to 242 00:14:20,400 --> 00:14:23,320 Speaker 1: go and do something about it. Otherwise they might just 243 00:14:23,360 --> 00:14:25,760 Speaker 1: sit on it, and then you have these vulnerabilities out 244 00:14:25,760 --> 00:14:29,080 Speaker 1: in the wild. Litchfield would end up having a long 245 00:14:30,000 --> 00:14:35,360 Speaker 1: adversarial relationship with Oracle. He frequently would test various builds 246 00:14:35,360 --> 00:14:39,160 Speaker 1: of Oracle software and would publish vulnerabilities on a regular basis, 247 00:14:39,720 --> 00:14:42,760 Speaker 1: often to the constern nation of Oracle. But to be fair, 248 00:14:43,400 --> 00:14:49,040 Speaker 1: Lichfield was not necessarily advocating the exploitation of those vulnerabilities. Rather, 249 00:14:49,600 --> 00:14:52,080 Speaker 1: he was calling on Oracle to treat security as a 250 00:14:52,160 --> 00:14:55,280 Speaker 1: foundation for its software, rather than what he referred to 251 00:14:55,400 --> 00:14:58,920 Speaker 1: as a goal keeping strategy, where you would just add 252 00:14:58,960 --> 00:15:01,600 Speaker 1: in a security measure at the end of the development 253 00:15:01,600 --> 00:15:04,560 Speaker 1: phase rather than from the beginning. He said, what they're 254 00:15:04,560 --> 00:15:07,800 Speaker 1: doing is they're trying to paste this security approach on 255 00:15:08,080 --> 00:15:11,120 Speaker 1: after they've developed everything else, and there's not always a 256 00:15:11,160 --> 00:15:13,760 Speaker 1: good fit there and a miss stuff as a result. 257 00:15:14,280 --> 00:15:17,280 Speaker 1: He was saying what they should do is create a 258 00:15:17,400 --> 00:15:21,000 Speaker 1: secure approach from the very beginning of development and test 259 00:15:21,040 --> 00:15:25,120 Speaker 1: it throughout the process to make sure that it remained intact. 260 00:15:25,880 --> 00:15:29,280 Speaker 1: So that was his argument. In two thousand four, oracles 261 00:15:29,320 --> 00:15:32,880 Speaker 1: chief security officer Mary Ann Davidson would write a piece 262 00:15:32,920 --> 00:15:36,040 Speaker 1: for zd net that said hackers like Lichfield where a 263 00:15:36,040 --> 00:15:40,520 Speaker 1: security threat to Oracle customers, and Lichfield's response was that 264 00:15:40,880 --> 00:15:44,720 Speaker 1: she should resign from her position and from Oracle, because 265 00:15:44,720 --> 00:15:50,440 Speaker 1: he said that that was a irresponsible response to what 266 00:15:50,600 --> 00:15:54,120 Speaker 1: he had done. But I read Davidson's piece because I 267 00:15:54,160 --> 00:15:58,040 Speaker 1: wanted to make sure I gave everyone a fair ground. 268 00:15:58,120 --> 00:16:01,440 Speaker 1: While I was researching this to quically, I tend to 269 00:16:02,080 --> 00:16:05,160 Speaker 1: side with hackers because there have been plenty of stories 270 00:16:05,480 --> 00:16:09,560 Speaker 1: of companies that publish software that have critical vulnerabilities in 271 00:16:09,640 --> 00:16:13,400 Speaker 1: them and then are alerted to those vulnerabilities and then 272 00:16:13,520 --> 00:16:17,280 Speaker 1: appear to do very little in response to that. And 273 00:16:17,320 --> 00:16:21,120 Speaker 1: thus the hackers who found the vulnerability say, it's my 274 00:16:21,200 --> 00:16:24,520 Speaker 1: responsibility to make this public because that will put the 275 00:16:24,560 --> 00:16:27,240 Speaker 1: pressure on the companies to actually fix the problem or 276 00:16:27,240 --> 00:16:30,160 Speaker 1: else they're going to lose customers. That's the argument. The 277 00:16:30,200 --> 00:16:33,240 Speaker 1: hackers have the approach of, well, if you don't do 278 00:16:33,240 --> 00:16:35,640 Speaker 1: anything about it, someone's going to take advantage of it. 279 00:16:35,720 --> 00:16:39,880 Speaker 1: People will get hurt in response. So the only thing 280 00:16:40,000 --> 00:16:43,160 Speaker 1: I can do, since I can't fix the problem for you, 281 00:16:43,480 --> 00:16:45,880 Speaker 1: is to let everyone know the problem exists, and then 282 00:16:45,920 --> 00:16:49,960 Speaker 1: you have to fix it. Well, Davidson wrote a piece 283 00:16:50,080 --> 00:16:51,920 Speaker 1: and I read it, and, like I said, she made 284 00:16:51,920 --> 00:16:55,560 Speaker 1: some good points. She mentioned that patching of vulnerability can 285 00:16:55,600 --> 00:16:57,760 Speaker 1: take a lot of time. It can take more time 286 00:16:57,800 --> 00:17:01,000 Speaker 1: than a hacker might assume it takes. She said, it 287 00:17:01,040 --> 00:17:03,280 Speaker 1: may only take twenty minutes to change a couple of 288 00:17:03,320 --> 00:17:06,560 Speaker 1: lines of code and everything's fine. But often it takes 289 00:17:06,560 --> 00:17:08,840 Speaker 1: more than that. It may be a vulnerability that only 290 00:17:08,880 --> 00:17:12,760 Speaker 1: pertains to one build of the software for a particular 291 00:17:12,800 --> 00:17:16,680 Speaker 1: operating system or architecture, and if you offer up software 292 00:17:16,720 --> 00:17:20,400 Speaker 1: for multiple operating systems and architectures, you have to test 293 00:17:20,440 --> 00:17:22,919 Speaker 1: all of them to find out where this vulnerability exists 294 00:17:22,960 --> 00:17:25,000 Speaker 1: and where it may not. So it may mean that 295 00:17:25,040 --> 00:17:26,840 Speaker 1: you have to take a little more extra time for that. 296 00:17:27,080 --> 00:17:29,760 Speaker 1: It could take time to patch it and then time 297 00:17:29,800 --> 00:17:32,800 Speaker 1: to distribute it to your customers. And she argued that 298 00:17:32,800 --> 00:17:36,879 Speaker 1: hackers who published vulnerabilities are not necessarily motivating companies to 299 00:17:36,920 --> 00:17:40,280 Speaker 1: fix problems, but rather jumping ahead of a fix that's 300 00:17:40,359 --> 00:17:44,360 Speaker 1: on the way now. If you're being generous, you could say, well, 301 00:17:44,400 --> 00:17:47,119 Speaker 1: that might be the case, and perhaps Litchfield and others 302 00:17:47,119 --> 00:17:50,399 Speaker 1: of his ilk have unreasonable expectations when it comes to 303 00:17:50,480 --> 00:17:54,280 Speaker 1: sending out fixes. Maybe there needs to be better communication 304 00:17:54,320 --> 00:17:57,520 Speaker 1: between the hackers and the companies to say, the companies 305 00:17:57,560 --> 00:18:01,200 Speaker 1: would respond with, thank you for alerting us to this problem. 306 00:18:01,240 --> 00:18:04,240 Speaker 1: We will work on it. We have an estimated time 307 00:18:04,280 --> 00:18:06,160 Speaker 1: of when we think we can get a patch out, 308 00:18:06,200 --> 00:18:08,879 Speaker 1: and it is at X time. Maybe at that point 309 00:18:09,359 --> 00:18:11,600 Speaker 1: everyone's on the same page and you don't have any 310 00:18:11,680 --> 00:18:15,679 Speaker 1: itchy trigger fingers when it comes to publishing vulnerabilities. But 311 00:18:16,320 --> 00:18:19,080 Speaker 1: I do think that Litchfield made a very good point 312 00:18:19,200 --> 00:18:22,680 Speaker 1: in stating that companies like Oracle have a very high 313 00:18:22,680 --> 00:18:26,160 Speaker 1: bar to meet when it comes to software security due 314 00:18:26,160 --> 00:18:29,080 Speaker 1: to the nature of the code that they sell. If 315 00:18:29,119 --> 00:18:33,399 Speaker 1: your product is meant to hold gigabytes of sensitive information, 316 00:18:34,040 --> 00:18:36,800 Speaker 1: it better be as secure as you can reasonably expect 317 00:18:36,880 --> 00:18:39,480 Speaker 1: it to be before you ship it, because it's a 318 00:18:39,560 --> 00:18:43,120 Speaker 1: guarantee that hackers are going to start poking and prodding 319 00:18:43,160 --> 00:18:46,240 Speaker 1: to find a weak spot. Davidson, by the way, would 320 00:18:46,240 --> 00:18:49,600 Speaker 1: remain the chief security officer of Oracle. She still holds 321 00:18:49,600 --> 00:18:54,280 Speaker 1: that position today, so she did not follow Litchfield's suggestion 322 00:18:54,359 --> 00:18:57,280 Speaker 1: that she's resigned from the company. In two thousand three, 323 00:18:57,600 --> 00:19:01,200 Speaker 1: Oracle launched a new product called Oracle ten G, which 324 00:19:01,280 --> 00:19:04,399 Speaker 1: was a grid computing product. It really built on that 325 00:19:04,480 --> 00:19:08,080 Speaker 1: applications cluster they had worked on previously, and now it 326 00:19:08,160 --> 00:19:12,600 Speaker 1: was more of a distributed database approach. And the company 327 00:19:12,640 --> 00:19:16,400 Speaker 1: also got involved in something else that took overheadlines, which 328 00:19:16,560 --> 00:19:20,639 Speaker 1: was an attempt to scoop up a competitor. The competitor 329 00:19:20,880 --> 00:19:25,040 Speaker 1: was a company called People soft. People Soft provided financial 330 00:19:25,080 --> 00:19:29,440 Speaker 1: management software, some supply chain management products, some enterprise performance 331 00:19:29,440 --> 00:19:32,679 Speaker 1: management software, and stuff like that. Essentially, it was in 332 00:19:32,720 --> 00:19:37,320 Speaker 1: a very similar business as NetSuite, So if you listen 333 00:19:37,359 --> 00:19:40,359 Speaker 1: to my net Suite podcast, you kind of getta have 334 00:19:40,400 --> 00:19:43,720 Speaker 1: a handle for what sort of stuff that company offered clients. 335 00:19:44,200 --> 00:19:47,679 Speaker 1: People Soft was in a similar business. On June second, 336 00:19:47,760 --> 00:19:51,000 Speaker 1: two thousand three, people Soft issue to press release staying 337 00:19:51,040 --> 00:19:54,720 Speaker 1: that the company was seeking to acquire a smaller software 338 00:19:54,800 --> 00:19:58,040 Speaker 1: vendor called j D. Edwards that operated in the same 339 00:19:58,080 --> 00:20:00,560 Speaker 1: space as people Soft, So in other words, they were 340 00:20:00,600 --> 00:20:03,119 Speaker 1: going to buy up a competitor, but it was a 341 00:20:03,200 --> 00:20:07,960 Speaker 1: smaller competitor. On June six of two thousand three, Oracle 342 00:20:08,280 --> 00:20:10,720 Speaker 1: issued its own press release, so this was just four 343 00:20:10,800 --> 00:20:15,119 Speaker 1: days later, and they stated that Oracle intended to acquire 344 00:20:15,200 --> 00:20:17,920 Speaker 1: people Soft and invited the board of people Soft to 345 00:20:18,040 --> 00:20:22,240 Speaker 1: enter into talks with Oracle, which ruffled some feathers over 346 00:20:22,280 --> 00:20:25,760 Speaker 1: at the executive level at people Soft. Oracle prepared to 347 00:20:25,880 --> 00:20:30,080 Speaker 1: hold a hostile takeover of the company. So let's talk 348 00:20:30,200 --> 00:20:33,120 Speaker 1: about what that means. So you've got different ways where 349 00:20:33,160 --> 00:20:38,080 Speaker 1: companies can merge together. There are acquisitions, they're mergers, These 350 00:20:38,119 --> 00:20:41,119 Speaker 1: are two terms that kind of give you a slightly 351 00:20:41,119 --> 00:20:45,040 Speaker 1: different uh feeling, right, Like, an acquisition sounds like a 352 00:20:45,080 --> 00:20:48,200 Speaker 1: larger company buying up a smaller company and then incorporating 353 00:20:48,200 --> 00:20:51,119 Speaker 1: that company into its operations in some way. A merger 354 00:20:51,200 --> 00:20:56,600 Speaker 1: sounds more like two companies of similar size and status 355 00:20:56,640 --> 00:20:59,520 Speaker 1: that merged together to form a new, mega powerful company 356 00:20:59,720 --> 00:21:03,560 Speaker 1: pasably able to turn into Voltron. In a hostile takeover, 357 00:21:03,920 --> 00:21:08,119 Speaker 1: one company goes directly to the shareholders of another company, 358 00:21:08,200 --> 00:21:11,399 Speaker 1: and the whole purpose is an attempt to gain control 359 00:21:11,600 --> 00:21:14,920 Speaker 1: of the second company. So in this case, Oracle would 360 00:21:14,960 --> 00:21:19,560 Speaker 1: essentially go to People's Soft shareholders and say, hey, here's 361 00:21:19,600 --> 00:21:23,560 Speaker 1: the deal. You've got shares in this company called people Soft. 362 00:21:24,000 --> 00:21:26,959 Speaker 1: I would like to buy your shares at a slightly 363 00:21:27,040 --> 00:21:29,679 Speaker 1: higher price than what they're worth on the market. And 364 00:21:29,720 --> 00:21:32,240 Speaker 1: that way I can run this company once I get 365 00:21:32,240 --> 00:21:36,199 Speaker 1: a majority of the shares, because as majority shareholder, I 366 00:21:36,240 --> 00:21:39,919 Speaker 1: can vote to determine what the company does, and that 367 00:21:40,000 --> 00:21:43,399 Speaker 1: way I bypass the leadership of people soften entirely because 368 00:21:43,400 --> 00:21:45,879 Speaker 1: it's a publicly traded company and the company has to 369 00:21:45,920 --> 00:21:49,440 Speaker 1: respond to shareholders. So all I have to do is 370 00:21:49,480 --> 00:21:52,760 Speaker 1: get more than fifty of the shares, and if I 371 00:21:52,840 --> 00:21:55,919 Speaker 1: do that, then I can force votes in people soft 372 00:21:55,960 --> 00:21:59,960 Speaker 1: and it essentially becomes my company. And from there I 373 00:22:00,040 --> 00:22:02,199 Speaker 1: can even move to the point where they agree to 374 00:22:02,240 --> 00:22:06,520 Speaker 1: be acquired. But people soft headed defense for this, they 375 00:22:06,640 --> 00:22:10,040 Speaker 1: used what was called a poison pill. Now, poison pills 376 00:22:10,040 --> 00:22:12,600 Speaker 1: are a category. They're not, It's not just a single thing. 377 00:22:13,240 --> 00:22:16,639 Speaker 1: Poison pills are strategies that got popular after a string 378 00:22:16,720 --> 00:22:20,440 Speaker 1: of hostile takeovers happened in the nineteen eighties was a 379 00:22:20,480 --> 00:22:24,600 Speaker 1: period of pretty cutthroat business practices, and after the nineteen 380 00:22:24,640 --> 00:22:27,359 Speaker 1: eighties you started to see hostile takeovers kind of fade 381 00:22:27,359 --> 00:22:30,440 Speaker 1: away and more mergers and acquisitions happen in the nineties, 382 00:22:30,880 --> 00:22:33,040 Speaker 1: and poison pills were part of the reason for that. 383 00:22:33,359 --> 00:22:36,080 Speaker 1: So typically, a poison pill is a measure that kicks 384 00:22:36,080 --> 00:22:40,399 Speaker 1: in once any single shareholder acquires a particular percentage of 385 00:22:40,440 --> 00:22:44,959 Speaker 1: ownership in a company. So for the purposes of this illustration, 386 00:22:44,960 --> 00:22:47,120 Speaker 1: I'm just going to use the example of thirty percent, 387 00:22:47,200 --> 00:22:50,760 Speaker 1: but that's a purely hypothetical example. There could be different 388 00:22:50,760 --> 00:22:54,800 Speaker 1: percentages for different companies. So once that conditions met, as in, 389 00:22:55,280 --> 00:22:59,720 Speaker 1: once one single shareholder gets hold of thirty percent of 390 00:23:00,040 --> 00:23:03,960 Speaker 1: all the shares of a company the poison pill activates. Now, 391 00:23:03,960 --> 00:23:06,840 Speaker 1: the outcome can take a couple of different forms. One 392 00:23:06,960 --> 00:23:09,920 Speaker 1: common one is that the company will issue new shares 393 00:23:10,440 --> 00:23:14,600 Speaker 1: which anyone apart from the entity that now has thirty 394 00:23:15,320 --> 00:23:17,800 Speaker 1: of the shares can buy at a discount. So, in 395 00:23:17,840 --> 00:23:20,280 Speaker 1: other words, let's say I'm trying to do a hostile 396 00:23:20,359 --> 00:23:27,400 Speaker 1: takeover of Disney because somehow I'm rolling in cash and 397 00:23:27,560 --> 00:23:32,120 Speaker 1: I have started to approach Disney shareholders, and I say, listen, uh, 398 00:23:32,160 --> 00:23:34,800 Speaker 1: I know that stocks are trading at X amount. I'm 399 00:23:34,840 --> 00:23:40,040 Speaker 1: ready to buy your shares at why which is higher 400 00:23:40,080 --> 00:23:43,040 Speaker 1: than X? And so you'll make a profit on your shares. 401 00:23:43,080 --> 00:23:45,120 Speaker 1: You'll make more money selling to me than you would 402 00:23:45,119 --> 00:23:47,879 Speaker 1: if you sold to the market. What do you say? 403 00:23:48,119 --> 00:23:52,760 Speaker 1: And once that hits, once I get of all those 404 00:23:52,800 --> 00:23:57,240 Speaker 1: Disney shares, the poison pill jumps in and Disney starts 405 00:23:57,280 --> 00:24:01,359 Speaker 1: to offer more shares of Disney at a lower price 406 00:24:01,400 --> 00:24:06,040 Speaker 1: than normal, a discounted price, but only to everyone apart 407 00:24:06,119 --> 00:24:09,720 Speaker 1: from me I have. Disney does not allow me to 408 00:24:09,800 --> 00:24:13,240 Speaker 1: buy shares at that reduced price, only other people. That 409 00:24:13,400 --> 00:24:16,480 Speaker 1: ends up diluting the shares, ends up making it more 410 00:24:16,560 --> 00:24:19,520 Speaker 1: difficult for me to get enough shares to actually have 411 00:24:19,640 --> 00:24:23,119 Speaker 1: a majority. Right by adding more shares, my thirty percent 412 00:24:23,280 --> 00:24:27,760 Speaker 1: is creeping downward because they're adding more to the overall number. 413 00:24:28,600 --> 00:24:31,919 Speaker 1: The price is also going down because the market valuation 414 00:24:31,920 --> 00:24:35,080 Speaker 1: of Disney has to remain the same. You can issue 415 00:24:35,080 --> 00:24:37,879 Speaker 1: more shares of the company, but the value of the 416 00:24:37,880 --> 00:24:40,760 Speaker 1: company does not magically changed. I mean I mentioned this 417 00:24:40,840 --> 00:24:44,399 Speaker 1: earlier in a previous episode. So if the value of 418 00:24:44,400 --> 00:24:47,719 Speaker 1: the company is dependent upon the number of shares and 419 00:24:47,800 --> 00:24:51,639 Speaker 1: the price per share, if you if you increase the 420 00:24:51,680 --> 00:24:55,040 Speaker 1: number of shares, you reduce the price per share. So 421 00:24:55,800 --> 00:24:59,320 Speaker 1: suddenly I have a smaller percentage, and it's worth less 422 00:24:59,359 --> 00:25:02,440 Speaker 1: than it was is when I bought everything, and I'm 423 00:25:02,480 --> 00:25:05,600 Speaker 1: further away from my goal of getting controlling interest in 424 00:25:05,640 --> 00:25:09,960 Speaker 1: the company. That is a version of the poison pill strategy. 425 00:25:10,000 --> 00:25:12,320 Speaker 1: That's just one. There are other ones. In the case 426 00:25:12,359 --> 00:25:15,600 Speaker 1: of people Soft, one poison pill strategy was a refund 427 00:25:15,640 --> 00:25:18,399 Speaker 1: promise the company had made to its customers, so not 428 00:25:18,560 --> 00:25:22,280 Speaker 1: at shareholders. This was to people Soft customers that may 429 00:25:22,359 --> 00:25:26,080 Speaker 1: or may not own shares in people Soft. The agreement 430 00:25:26,480 --> 00:25:30,480 Speaker 1: was that in the event of a hostile takeover enterprise, 431 00:25:30,520 --> 00:25:34,680 Speaker 1: customers would be guaranteed a refund of two to five 432 00:25:34,840 --> 00:25:38,679 Speaker 1: times more than whatever the licensing fee they had to 433 00:25:39,200 --> 00:25:44,040 Speaker 1: spend was to use People's Soft products. And so essentially 434 00:25:44,080 --> 00:25:46,359 Speaker 1: what people Soft is saying is, hey, do you do 435 00:25:46,400 --> 00:25:49,000 Speaker 1: you have a license for our stuff? However much you 436 00:25:49,080 --> 00:25:52,080 Speaker 1: paid for it, You'll get paid two to five times 437 00:25:52,080 --> 00:25:55,400 Speaker 1: more than that if there's a hostile takeover, which essentially 438 00:25:55,400 --> 00:25:59,040 Speaker 1: puts the burden on whichever company takes people Soft over 439 00:25:59,480 --> 00:26:02,720 Speaker 1: to make good on that promise, So you would start 440 00:26:02,720 --> 00:26:05,240 Speaker 1: off immediately with a huge payout you would have to 441 00:26:05,280 --> 00:26:08,919 Speaker 1: make to all of People's Soft customers. Oracle would sue 442 00:26:08,920 --> 00:26:11,800 Speaker 1: people Soft over this poison pill, saying that the company 443 00:26:11,880 --> 00:26:16,239 Speaker 1: was ignoring shareholder desires through such maneuvers, saying, hey, if 444 00:26:16,280 --> 00:26:19,600 Speaker 1: shareholders want to sell to us, you shouldn't discourage it 445 00:26:19,680 --> 00:26:22,400 Speaker 1: by having this other measure in place, because then you're 446 00:26:22,480 --> 00:26:26,640 Speaker 1: hurting your shareholders. People's Soft response was, look, this move 447 00:26:26,720 --> 00:26:29,680 Speaker 1: is good for our customers, which in the long term 448 00:26:29,720 --> 00:26:32,919 Speaker 1: means it's good for our shareholders. So things got pretty ugly. 449 00:26:33,480 --> 00:26:36,240 Speaker 1: The United States Department of Justice also got into the act. 450 00:26:36,720 --> 00:26:40,679 Speaker 1: They filed a lawsuit against Oracle, a complaint against them anyway, 451 00:26:40,720 --> 00:26:43,080 Speaker 1: and stated that if Oracle were to acquire people Soft, 452 00:26:43,359 --> 00:26:47,040 Speaker 1: it would be in violation of antitrust laws. Effectively, they 453 00:26:47,040 --> 00:26:49,639 Speaker 1: were saying Oracle would create a monopoly in the market. 454 00:26:49,720 --> 00:26:52,239 Speaker 1: This was something else that people Soft had suggested was 455 00:26:52,400 --> 00:26:55,240 Speaker 1: a possible outcome and a reason why Oracle should not 456 00:26:55,280 --> 00:26:58,080 Speaker 1: be allowed to take over the company. A federal judge 457 00:26:58,119 --> 00:27:01,400 Speaker 1: would later throw this case out, stating that the Deparminent 458 00:27:01,400 --> 00:27:04,680 Speaker 1: of Justice had failed to make its case that they 459 00:27:04,720 --> 00:27:07,320 Speaker 1: failed to give evidence that this would actually be a 460 00:27:07,400 --> 00:27:11,560 Speaker 1: violation of antitrust laws. Around that same time, Oracle changed 461 00:27:11,640 --> 00:27:15,359 Speaker 1: up the structure of its executive leadership. The company had 462 00:27:15,400 --> 00:27:19,359 Speaker 1: the CEO and chairman roles combined before, but at this 463 00:27:19,400 --> 00:27:22,200 Speaker 1: point they decided to split them up, so Ellison would 464 00:27:22,200 --> 00:27:25,840 Speaker 1: remain the company's CEO and a director of the company, 465 00:27:26,080 --> 00:27:29,280 Speaker 1: and Jeff Henley became the chairman of the board of directors. 466 00:27:30,040 --> 00:27:33,000 Speaker 1: After about two years of ugly battles in and out 467 00:27:33,000 --> 00:27:37,080 Speaker 1: of courts, Oracle eventually acquired people Soft for the princely 468 00:27:37,320 --> 00:27:42,320 Speaker 1: sum of about ten point three billion dollars. Afterward, employees 469 00:27:42,320 --> 00:27:44,560 Speaker 1: of the former people Soft got their first taste of 470 00:27:44,560 --> 00:27:47,320 Speaker 1: how things were going to change, because Oracle laid off 471 00:27:47,400 --> 00:27:51,760 Speaker 1: about half of People's Soft workforce, firing around five thousand 472 00:27:51,840 --> 00:27:54,600 Speaker 1: to six thousand people, so either just less than half 473 00:27:54,680 --> 00:27:57,280 Speaker 1: or just more than half, because People's had about eleven 474 00:27:57,280 --> 00:28:00,320 Speaker 1: thousand people working for it when Oracle purchased it, and 475 00:28:00,400 --> 00:28:03,159 Speaker 1: I saw differing accounts of exactly how many people were 476 00:28:03,200 --> 00:28:05,879 Speaker 1: laid off those in the thousands, and it meant that 477 00:28:05,920 --> 00:28:07,840 Speaker 1: if you worked at people Soft, there was a good 478 00:28:07,920 --> 00:28:09,800 Speaker 1: chance you weren't going to be there very long, or 479 00:28:09,840 --> 00:28:12,720 Speaker 1: that half the people around you we're gonna disappear pretty soon. 480 00:28:13,320 --> 00:28:15,560 Speaker 1: This was part of a larger move by Oracle to 481 00:28:15,800 --> 00:28:19,280 Speaker 1: reduce its workforce. At that time. The company also released 482 00:28:19,320 --> 00:28:22,199 Speaker 1: a new version of its database software for free, and 483 00:28:22,200 --> 00:28:26,160 Speaker 1: they called it Oracle Database ten G Express Edition. This 484 00:28:26,200 --> 00:28:28,840 Speaker 1: was in two thousand five. Now. This version of Oracles 485 00:28:28,920 --> 00:28:33,320 Speaker 1: database software had limitations built in specifically to encourage customers 486 00:28:33,359 --> 00:28:36,480 Speaker 1: to upgrade to the products Oracle was selling while giving 487 00:28:36,520 --> 00:28:39,000 Speaker 1: them a sense of what was possible using that software. 488 00:28:39,040 --> 00:28:42,920 Speaker 1: So it's kind of like breaks being put on the system. 489 00:28:43,160 --> 00:28:47,320 Speaker 1: They couldn't couldn't do everything that Oracles flagship software what 490 00:28:47,360 --> 00:28:49,760 Speaker 1: could do, which makes sense. It was just a way 491 00:28:49,880 --> 00:28:52,840 Speaker 1: of of sort of marketing to people, as well as 492 00:28:52,920 --> 00:28:55,960 Speaker 1: offering up a free database solution that did in fact 493 00:28:56,000 --> 00:29:00,479 Speaker 1: work for smaller scale projects. So if you were not 494 00:29:00,720 --> 00:29:04,400 Speaker 1: running a big company, you could use this database software 495 00:29:05,160 --> 00:29:08,000 Speaker 1: effectively all by its own. You didn't have to feel 496 00:29:08,040 --> 00:29:10,600 Speaker 1: like you needed to upgrade. But for other companies it 497 00:29:10,640 --> 00:29:12,960 Speaker 1: might just be a way of kind of previewing what 498 00:29:13,080 --> 00:29:16,600 Speaker 1: Oracle had to offer. In September two thou five, Oracle 499 00:29:16,760 --> 00:29:21,600 Speaker 1: announced that it would acquire sebl CRM Systems, Incorporated. This 500 00:29:21,720 --> 00:29:25,400 Speaker 1: was the company that was founded by former Oracle sales 501 00:29:25,400 --> 00:29:29,080 Speaker 1: executive Thomas Siebel in the early nineteen nineties. You might 502 00:29:29,120 --> 00:29:32,239 Speaker 1: remember I mentioned him during the last episode. Seoble had 503 00:29:32,320 --> 00:29:34,719 Speaker 1: left Oracle in the wake of its sales shake up 504 00:29:35,160 --> 00:29:38,880 Speaker 1: after that whole issue with how sales was handling things 505 00:29:38,920 --> 00:29:43,720 Speaker 1: and the incorrect reporting of revenues. The deal was valued 506 00:29:43,760 --> 00:29:47,080 Speaker 1: at five point eight billion dollars, and it brought Siebel's 507 00:29:47,080 --> 00:29:51,560 Speaker 1: customer relationship management software under the umbrella of Oracle. Now. 508 00:29:51,560 --> 00:29:54,360 Speaker 1: The next couple of years brought your usual updates to 509 00:29:54,360 --> 00:29:58,120 Speaker 1: Oracle software and a couple more acquisitions. Oracle bought Portal 510 00:29:58,200 --> 00:30:00,960 Speaker 1: Software for about four forty mill and then spent an 511 00:30:00,960 --> 00:30:05,400 Speaker 1: equal amount acquiring another company called Stellent. These companies sold 512 00:30:05,440 --> 00:30:10,520 Speaker 1: billing and revenue management software and enterprise content management products respectively. 513 00:30:10,880 --> 00:30:14,080 Speaker 1: And that would not be the end of oracles list 514 00:30:14,160 --> 00:30:16,880 Speaker 1: of acquisitions. It was actually on a tear and uh, 515 00:30:17,080 --> 00:30:18,880 Speaker 1: there's a lot more to talk about to kind of 516 00:30:18,920 --> 00:30:21,719 Speaker 1: bring us up to date to what Oracle is doing today. 517 00:30:22,240 --> 00:30:24,720 Speaker 1: But before I jump into that, let's take another quick 518 00:30:24,760 --> 00:30:34,760 Speaker 1: break to thank our sponsor. In two thousand and six, 519 00:30:34,800 --> 00:30:39,719 Speaker 1: Oracle made another acquisition, purchasing the performance management software company 520 00:30:39,880 --> 00:30:44,960 Speaker 1: met to Solve for three point three billion dollars. Oracle 521 00:30:45,000 --> 00:30:47,840 Speaker 1: continued to grow and diversify its products by incorporating the 522 00:30:47,880 --> 00:30:52,120 Speaker 1: technology from previous competitors as add on features and software suites. 523 00:30:52,480 --> 00:30:54,640 Speaker 1: So this reminds me a lot of the story of 524 00:30:54,720 --> 00:30:59,840 Speaker 1: Comcast actually, where that company managed to compete not by 525 00:31:00,720 --> 00:31:04,960 Speaker 1: necessarily creating better services and products, but by buying up 526 00:31:05,040 --> 00:31:09,120 Speaker 1: competitors in various regions. In two thousand seven, Oracle filed 527 00:31:09,160 --> 00:31:12,080 Speaker 1: a lawsuit of its own. This case was against a 528 00:31:12,120 --> 00:31:15,080 Speaker 1: company called s A P a G. S a P 529 00:31:15,360 --> 00:31:19,360 Speaker 1: is a company with headquarters in Weinheim, Germany, or Weinheim 530 00:31:19,400 --> 00:31:22,719 Speaker 1: if I'm pronouncing it the proper way for for the Deutsch. 531 00:31:23,280 --> 00:31:27,719 Speaker 1: Like Oracle, s a P creates enterprise software for big 532 00:31:27,840 --> 00:31:31,400 Speaker 1: company clients, and it's one of Oracle's main competitors in 533 00:31:31,440 --> 00:31:35,720 Speaker 1: that space. SAP, by the way, traces its origins to IBM. 534 00:31:35,880 --> 00:31:38,800 Speaker 1: The founders of SAP worked for IBM before leaving to 535 00:31:38,840 --> 00:31:42,239 Speaker 1: create their own business. But the lawsuit focused on a 536 00:31:42,280 --> 00:31:46,360 Speaker 1: particular branch of s a P called tomorrow Now. That 537 00:31:46,520 --> 00:31:50,240 Speaker 1: unit would provide customer support to Oracle customers, but at 538 00:31:50,240 --> 00:31:54,440 Speaker 1: a lower rate than what Oracle charged. Now, remember, Oracle 539 00:31:54,480 --> 00:31:58,240 Speaker 1: made money not just by selling software, but also by 540 00:31:58,240 --> 00:32:02,360 Speaker 1: offering ongoing support for a price. So s a P 541 00:32:02,680 --> 00:32:08,280 Speaker 1: was undercutting Oracle for support services for Oracle's own software. Now, 542 00:32:08,320 --> 00:32:10,720 Speaker 1: that was not the issue of the lawsuit, right, that 543 00:32:10,800 --> 00:32:14,040 Speaker 1: was not illegal. The central problem was that Oracle had 544 00:32:14,120 --> 00:32:18,680 Speaker 1: detected thousands of illegal downloads of its software and traced 545 00:32:18,720 --> 00:32:23,480 Speaker 1: them to SAP employees. SAP eventually admitted that, in fact 546 00:32:23,560 --> 00:32:28,840 Speaker 1: employees had been illegally downloading Oracle software, and initially Oracle 547 00:32:28,920 --> 00:32:31,840 Speaker 1: sought a reward and excess of a billion dollars, but 548 00:32:31,920 --> 00:32:35,440 Speaker 1: eventually agreed to a more modest award of three fifty 549 00:32:35,440 --> 00:32:38,800 Speaker 1: million dollars. Or so the litigation stretched on for several 550 00:32:38,880 --> 00:32:42,080 Speaker 1: years before reaching that point, with Larry Ellison himself providing 551 00:32:42,080 --> 00:32:44,800 Speaker 1: testimony in the case in twenty ten. So this was 552 00:32:45,280 --> 00:32:48,600 Speaker 1: a huge, huge deal. It was a big, big problem. 553 00:32:48,680 --> 00:32:52,560 Speaker 1: And uh eventually Oracle ended up coming out on the 554 00:32:52,640 --> 00:32:54,320 Speaker 1: right side of that one. And and they had a 555 00:32:54,400 --> 00:32:58,640 Speaker 1: legit complaint because that that software had been illegally downloaded. 556 00:32:58,640 --> 00:33:01,959 Speaker 1: Even though it was in the service of something that 557 00:33:02,120 --> 00:33:05,720 Speaker 1: wasn't illegal, the act of downing that software was illegal. 558 00:33:06,160 --> 00:33:09,480 Speaker 1: Oracle made a few more acquisitions at that time, including 559 00:33:09,520 --> 00:33:13,840 Speaker 1: Agile Software Corporation and b e A Systems. The company 560 00:33:13,880 --> 00:33:16,479 Speaker 1: would state that it viewed acquisitions as sort of a 561 00:33:16,560 --> 00:33:20,040 Speaker 1: risk free way to invest in research and development because 562 00:33:20,080 --> 00:33:23,640 Speaker 1: those companies had spent years fine tuning their various products. 563 00:33:23,640 --> 00:33:26,720 Speaker 1: So Oracle took advantage of that by bringing those companies 564 00:33:26,760 --> 00:33:29,400 Speaker 1: into the fold and entering the new parts of the 565 00:33:29,520 --> 00:33:33,520 Speaker 1: enterprise software industry. As a result, every time it was 566 00:33:33,600 --> 00:33:36,880 Speaker 1: able to add to its list of services, it suddenly 567 00:33:36,960 --> 00:33:39,600 Speaker 1: had the opportunity to market to new customers. And it 568 00:33:39,600 --> 00:33:41,840 Speaker 1: didn't have to do this by starting from scratch. They 569 00:33:41,840 --> 00:33:44,160 Speaker 1: didn't have to do it all internally. They would find 570 00:33:44,200 --> 00:33:47,120 Speaker 1: other companies that had already done that groundwork and then 571 00:33:47,160 --> 00:33:49,840 Speaker 1: purchase them and bring them in. In two thousand and ten, 572 00:33:50,080 --> 00:33:54,160 Speaker 1: Oracle made another big move with its bid for Sun Microsystems. 573 00:33:54,760 --> 00:33:58,080 Speaker 1: Sun was a computer company that primarily sold hardware, although 574 00:33:58,080 --> 00:34:01,040 Speaker 1: it also had a software component as well. Son had 575 00:34:01,040 --> 00:34:03,720 Speaker 1: been around since the early nineteen eighties, and the business 576 00:34:03,760 --> 00:34:07,000 Speaker 1: was built on the back of Unix workstations. The company 577 00:34:07,040 --> 00:34:10,000 Speaker 1: had previously been in talks with IBM about an acquisition, 578 00:34:10,239 --> 00:34:13,000 Speaker 1: but in two thousand nine, Oracle and Son announced that 579 00:34:13,040 --> 00:34:16,760 Speaker 1: the two companies intended to merge. The process continued until 580 00:34:16,760 --> 00:34:21,319 Speaker 1: early ten, when the agreement became official, and many of 581 00:34:21,360 --> 00:34:24,880 Speaker 1: the executives and lead developers over its Son resigned in 582 00:34:24,960 --> 00:34:28,360 Speaker 1: the wake of the merger, including Tim Bray, who created 583 00:34:28,680 --> 00:34:33,160 Speaker 1: Extensible Markup Language or XML, and James Gosling, who was 584 00:34:33,200 --> 00:34:37,040 Speaker 1: the creator of Java. The acquisition meant that Oracle now 585 00:34:37,120 --> 00:34:40,160 Speaker 1: had the rights to Java. This in turn set the 586 00:34:40,200 --> 00:34:45,000 Speaker 1: stage for a lawsuit pitting Oracle against Google. At issue 587 00:34:45,080 --> 00:34:47,719 Speaker 1: was Google's use of Java a p I S for 588 00:34:47,840 --> 00:34:50,400 Speaker 1: its Android operating system. So you can kind of think 589 00:34:50,480 --> 00:34:53,960 Speaker 1: of Java in this sense as being a bunch of 590 00:34:54,040 --> 00:34:59,399 Speaker 1: different code shortcuts, right, almost like modules and developers would 591 00:34:59,520 --> 00:35:02,880 Speaker 1: use these modules to help build out applications because it 592 00:35:02,960 --> 00:35:06,120 Speaker 1: was faster and easier than doing it all from the 593 00:35:06,160 --> 00:35:10,080 Speaker 1: ground up. So you needed certain basic functionality in your app. 594 00:35:10,120 --> 00:35:12,759 Speaker 1: You would grab certain sections of Java and you would 595 00:35:12,840 --> 00:35:15,279 Speaker 1: chain them together and then add in some of your 596 00:35:15,280 --> 00:35:17,960 Speaker 1: own code and voila, you get your app. But it 597 00:35:18,040 --> 00:35:19,680 Speaker 1: meant that you saved a lot of time because you 598 00:35:19,719 --> 00:35:24,280 Speaker 1: could use these basic building blocks as part of your foundation. Well, 599 00:35:24,600 --> 00:35:27,440 Speaker 1: the problem was that all of that stuff in theory 600 00:35:27,719 --> 00:35:31,400 Speaker 1: at least belong to Oracle now, and the two companies, 601 00:35:31,400 --> 00:35:34,640 Speaker 1: Google and Oracle couldn't come to a licensing agreement, so 602 00:35:34,800 --> 00:35:38,680 Speaker 1: Oracle sued Google for copyright infringement, saying, hey, you're using 603 00:35:39,160 --> 00:35:43,719 Speaker 1: our software are our product without our permission, and you're 604 00:35:43,800 --> 00:35:48,359 Speaker 1: using it to build uh commercial apps and you're using 605 00:35:48,360 --> 00:35:51,560 Speaker 1: it for your developers. That's without our permission. That's not cool. 606 00:35:52,000 --> 00:35:54,640 Speaker 1: Google had used a programming platform and had built on 607 00:35:54,719 --> 00:35:58,240 Speaker 1: top of Java functions. So while Google had its own 608 00:35:59,040 --> 00:36:04,480 Speaker 1: UH developing platform, it did have underlying Java functions powering that. 609 00:36:04,640 --> 00:36:08,040 Speaker 1: So in the original trial, the judge found that the 610 00:36:08,160 --> 00:36:12,719 Speaker 1: Java features in question were not protected under copyright. He said, well, 611 00:36:13,000 --> 00:36:19,040 Speaker 1: your argument can't hold Oracle because these are not copyrighted ideas. 612 00:36:19,600 --> 00:36:24,080 Speaker 1: Oracle appealed that decision, and the Court of Appeals reversed 613 00:36:24,160 --> 00:36:28,000 Speaker 1: part of that earlier decision, saying that the features were 614 00:36:28,040 --> 00:36:31,680 Speaker 1: certainly copyrightable. So the first judge had made a mistake 615 00:36:31,719 --> 00:36:34,839 Speaker 1: saying no, you can't copyright these, and the appeals court 616 00:36:34,880 --> 00:36:37,759 Speaker 1: said no, no, those those are definitely protected by copyright. 617 00:36:37,800 --> 00:36:40,799 Speaker 1: But the Court of Appeals also gave Google a bit 618 00:36:40,800 --> 00:36:43,080 Speaker 1: of wiggle rooms, saying that Google might have a viable 619 00:36:43,160 --> 00:36:47,040 Speaker 1: fair use defense. Remember, a fair use is this idea 620 00:36:47,120 --> 00:36:51,120 Speaker 1: that you can actually use material that's under copyright under 621 00:36:51,560 --> 00:36:55,600 Speaker 1: certain circumstances and meeting certain criteria. But all of that 622 00:36:55,760 --> 00:36:58,799 Speaker 1: is determined within the court of law. You can't just 623 00:36:58,880 --> 00:37:02,080 Speaker 1: say fair use and you've got a magic shield that 624 00:37:02,080 --> 00:37:05,560 Speaker 1: protects you from lawsuits. It's rather you get sued. Then 625 00:37:05,600 --> 00:37:08,160 Speaker 1: you have to make an argument that your use of 626 00:37:08,200 --> 00:37:10,960 Speaker 1: the material falls under fair use, and a court has 627 00:37:11,040 --> 00:37:14,319 Speaker 1: to agree with that. So this really just set up 628 00:37:14,560 --> 00:37:19,440 Speaker 1: Google's potential defense. So a second trial took place, and 629 00:37:19,480 --> 00:37:22,759 Speaker 1: then the jury of that trial decided that Google did 630 00:37:23,000 --> 00:37:26,720 Speaker 1: uh did in fact use the material out of fair use. So, 631 00:37:26,840 --> 00:37:30,960 Speaker 1: in other words, again, Oracle loses right. Google gets the 632 00:37:31,040 --> 00:37:34,680 Speaker 1: exoneration by saying, well, yeah, it was copyrighted material, but 633 00:37:34,800 --> 00:37:38,000 Speaker 1: the way you used it is totally fair use. Oracle 634 00:37:38,040 --> 00:37:42,600 Speaker 1: would file another appeal stating that the decision that this 635 00:37:42,719 --> 00:37:46,480 Speaker 1: was fair use was based on an incorrect understanding of 636 00:37:46,640 --> 00:37:50,400 Speaker 1: Java and Google's Android platforms, that it was framed in 637 00:37:50,440 --> 00:37:53,920 Speaker 1: such a way that sounded like Oracles uh products are 638 00:37:53,960 --> 00:37:57,200 Speaker 1: meant for PCs and Google's are meant for smartphones. And 639 00:37:57,239 --> 00:37:59,640 Speaker 1: they said, well, no, there's a lot more stuff in 640 00:37:59,680 --> 00:38:02,920 Speaker 1: between those two things, and that's where the real problem is. 641 00:38:03,440 --> 00:38:05,480 Speaker 1: So in March two thousand eighteen, the U. S. Court 642 00:38:05,480 --> 00:38:08,960 Speaker 1: of Appeals for the Federal Circuit reversed this decision of 643 00:38:09,000 --> 00:38:12,400 Speaker 1: the second trial, stating that Google's use of Java A 644 00:38:12,520 --> 00:38:15,600 Speaker 1: p I S did not constitute fair use and that 645 00:38:15,680 --> 00:38:18,000 Speaker 1: Oracle was in the right. The case has now been 646 00:38:18,040 --> 00:38:20,920 Speaker 1: remanded to a lower district court to determine what damages 647 00:38:20,920 --> 00:38:25,839 Speaker 1: Google owes Oracle, And so the saga continues. Meanwhile, let's 648 00:38:25,880 --> 00:38:29,160 Speaker 1: jump back to because I mean, that whole story stretch 649 00:38:29,200 --> 00:38:32,520 Speaker 1: from twenty to current day. It's still going. But back 650 00:38:32,560 --> 00:38:35,520 Speaker 1: in the U. S. Department of Justice filed a complaint 651 00:38:35,600 --> 00:38:39,759 Speaker 1: against Oracle alleging the company had committed contract fraud. The 652 00:38:39,800 --> 00:38:42,840 Speaker 1: Department of Justice accused Oracle of defrauding the United States 653 00:38:42,840 --> 00:38:47,360 Speaker 1: government on a General Services Administration software contract that started 654 00:38:47,400 --> 00:38:50,920 Speaker 1: in nine and concluded in two thousand six. Now, according 655 00:38:50,960 --> 00:38:55,080 Speaker 1: to this complaint, Oracle had agreed to offer government offices 656 00:38:55,480 --> 00:39:00,200 Speaker 1: the best discounts it offered to non government customers. So, 657 00:39:00,239 --> 00:39:02,439 Speaker 1: in other words, they said, whatever the lowest price is 658 00:39:02,520 --> 00:39:07,080 Speaker 1: that we're offering, governments will get access to that lowest price. 659 00:39:07,760 --> 00:39:10,480 Speaker 1: If it's a special that we're running, then governments will 660 00:39:10,480 --> 00:39:14,359 Speaker 1: have that as the standard fee for our services, and 661 00:39:14,400 --> 00:39:17,919 Speaker 1: whatever the best possible prices, the government will be able 662 00:39:17,920 --> 00:39:21,480 Speaker 1: to take advantage of that. So the complain alleged that 663 00:39:21,560 --> 00:39:24,920 Speaker 1: Oracle had failed to do this, and that thus government 664 00:39:24,960 --> 00:39:29,319 Speaker 1: offices were overpaying for Oracle products and services. According to 665 00:39:29,520 --> 00:39:33,560 Speaker 1: the agreement, that there were commercial deals with some of 666 00:39:33,600 --> 00:39:38,120 Speaker 1: Oracle's customers that were below the fee that government offices 667 00:39:38,160 --> 00:39:41,239 Speaker 1: were paying for those same services and same products. In 668 00:39:41,280 --> 00:39:43,839 Speaker 1: two thousand eleven, Oracle agreed to pay out nearly two 669 00:39:43,960 --> 00:39:48,440 Speaker 1: hundred million dollars plus interest to settle those charges, and 670 00:39:48,480 --> 00:39:50,759 Speaker 1: then again in twousd ten that was the year that 671 00:39:50,840 --> 00:39:55,480 Speaker 1: Ellison would bring in Mark Heard to replace Charles Phillips. 672 00:39:55,480 --> 00:39:58,440 Speaker 1: Phillips had been serving as Oracles president at that time. 673 00:39:58,880 --> 00:40:02,160 Speaker 1: Phillips had led the come during that period of acquisitions 674 00:40:02,360 --> 00:40:06,480 Speaker 1: and became co president after only six months of working 675 00:40:06,480 --> 00:40:10,719 Speaker 1: at Oracle back in two thousand three. But in a 676 00:40:10,760 --> 00:40:14,560 Speaker 1: string of things happened that really put Phillips on the defense. 677 00:40:14,680 --> 00:40:17,360 Speaker 1: First of all, a woman revealed that she and Phillips 678 00:40:17,400 --> 00:40:20,800 Speaker 1: had been involved in an extramarital affair for eight years. 679 00:40:21,160 --> 00:40:25,080 Speaker 1: Phillips had been married for thirty years, and this girl 680 00:40:25,120 --> 00:40:27,520 Speaker 1: friend of his had paid thousands of dollars to put 681 00:40:27,560 --> 00:40:31,040 Speaker 1: up billboard ads revealing the relationship, saying she had entered 682 00:40:31,080 --> 00:40:34,000 Speaker 1: into it under the understanding that Phillips was separated from 683 00:40:34,000 --> 00:40:37,719 Speaker 1: his wife, which was not the case. Phillips had later 684 00:40:37,920 --> 00:40:41,359 Speaker 1: made a statement that Oracle planned to spend about seventy 685 00:40:41,360 --> 00:40:45,000 Speaker 1: billion dollars and acquisitions over the next five years, which 686 00:40:45,080 --> 00:40:47,880 Speaker 1: the company later denied and said, no, we don't have 687 00:40:48,000 --> 00:40:51,520 Speaker 1: a budget, says side for acquisitions for the next five years. 688 00:40:51,800 --> 00:40:54,520 Speaker 1: Seventy billion dollars was a number that Phillips just kind 689 00:40:54,520 --> 00:40:57,520 Speaker 1: of uh invented. This is what the company was saying 690 00:40:57,800 --> 00:41:02,480 Speaker 1: because shareholders were react ding in the alarm that a 691 00:41:02,520 --> 00:41:05,799 Speaker 1: company was spending planning to spend seventy billion dollars over 692 00:41:05,840 --> 00:41:09,400 Speaker 1: the course of five years. So both of those things, 693 00:41:09,440 --> 00:41:14,960 Speaker 1: his personal life and this particular announcement gave his reputational damage, 694 00:41:15,080 --> 00:41:18,360 Speaker 1: and he was out and replaced by the former CEO 695 00:41:18,600 --> 00:41:22,479 Speaker 1: of Hewitt Packard, a man named Mark Heard. Now Heard 696 00:41:22,560 --> 00:41:26,360 Speaker 1: himself was also the center of a scandal. He was 697 00:41:26,440 --> 00:41:31,040 Speaker 1: actually ousted as CEO of HP after an actress named 698 00:41:31,160 --> 00:41:35,680 Speaker 1: Jody Fisher accused him of sexual harassment. Fisher had worked 699 00:41:35,680 --> 00:41:39,200 Speaker 1: with HP to coordinate and host events on behalf of 700 00:41:39,239 --> 00:41:41,880 Speaker 1: the company. She would appear at these HP events, and 701 00:41:41,960 --> 00:41:45,120 Speaker 1: Mark Heard was frequently there as well, and she alleged 702 00:41:45,560 --> 00:41:49,600 Speaker 1: that Heard had behaved inappropriately toward her, using his position 703 00:41:49,600 --> 00:41:53,000 Speaker 1: as a means to try to manipulate her into a 704 00:41:53,040 --> 00:41:58,400 Speaker 1: physical relationship, although she said no physical relationship ever actually developed. 705 00:41:58,840 --> 00:42:02,480 Speaker 1: She employed a year named Gloria Allred, who sent a 706 00:42:02,560 --> 00:42:06,359 Speaker 1: letter to HP filled with the accusations that Fisher had 707 00:42:06,400 --> 00:42:10,439 Speaker 1: against herd Heard was ousted as CEO of HP kind 708 00:42:10,440 --> 00:42:14,480 Speaker 1: of In response, Ellison criticized this move. He said that 709 00:42:14,840 --> 00:42:18,600 Speaker 1: HP was crazy to fire Herd, and so he then 710 00:42:18,640 --> 00:42:22,239 Speaker 1: went on to hire Herd to help lead Oracle. This, 711 00:42:22,360 --> 00:42:25,680 Speaker 1: in turn, would make headlines. HP would later state than 712 00:42:25,719 --> 00:42:30,200 Speaker 1: an internal investigation cleared heard of the harassment accusations, but 713 00:42:30,320 --> 00:42:34,200 Speaker 1: that he had filed inaccurate expense reports in order to 714 00:42:34,640 --> 00:42:39,920 Speaker 1: hide this relationship from the company, and that it was 715 00:42:40,040 --> 00:42:43,960 Speaker 1: these these false expense reports that really led to his 716 00:42:44,120 --> 00:42:47,960 Speaker 1: dismissal as CEO. Fisher stated that she and Herd had 717 00:42:47,960 --> 00:42:51,080 Speaker 1: settled the matter out of court and without litigation. A 718 00:42:51,080 --> 00:42:55,400 Speaker 1: little bit later, in September, a report revealed that Larry 719 00:42:55,400 --> 00:42:59,240 Speaker 1: Ellison had received a compensation package of nearly seventies seven 720 00:42:59,480 --> 00:43:03,800 Speaker 1: million dollars for the previous fiscal year. That's a pretty 721 00:43:03,880 --> 00:43:07,239 Speaker 1: huge salary, even for a CEO. In fact, a lot 722 00:43:07,280 --> 00:43:12,359 Speaker 1: of CEOs get relatively modest salaries compared to other executives 723 00:43:12,400 --> 00:43:15,759 Speaker 1: because their compensation largely ends up being tied with the 724 00:43:15,800 --> 00:43:19,239 Speaker 1: profitability of the company, so their bonuses end up being 725 00:43:20,719 --> 00:43:23,439 Speaker 1: through the roof if the company is doing well, but 726 00:43:23,800 --> 00:43:29,319 Speaker 1: otherwise they have still huge salaries, typically way more than 727 00:43:29,360 --> 00:43:33,320 Speaker 1: what most people make, but not anywhere close to seventy 728 00:43:33,360 --> 00:43:37,720 Speaker 1: seven million dollars, and that that fact had some shareholders 729 00:43:37,760 --> 00:43:41,280 Speaker 1: a little concerned that Larry Elson was making that much money. 730 00:43:41,600 --> 00:43:44,560 Speaker 1: In two thousand fourteen, Oracle issued a press release staying 731 00:43:44,600 --> 00:43:47,440 Speaker 1: that Larry Ellison was transitioning to a new role. He 732 00:43:47,480 --> 00:43:50,000 Speaker 1: was no longer going to be CEO. He was stepping down, 733 00:43:50,040 --> 00:43:53,640 Speaker 1: but he was not retiring despite being in his seventies. 734 00:43:53,920 --> 00:43:56,640 Speaker 1: He would serve as Chairman of the board and chief 735 00:43:56,680 --> 00:44:00,480 Speaker 1: Technology Officer for Oracle. Jeff Henley, who was the previous 736 00:44:00,600 --> 00:44:03,360 Speaker 1: chairman of the board, was sort of demoted to the 737 00:44:03,480 --> 00:44:07,880 Speaker 1: position of vice chairman, and the new CEO of Oracle 738 00:44:08,560 --> 00:44:11,399 Speaker 1: was actually two people. It wasn't a single CEO. They 739 00:44:11,400 --> 00:44:15,319 Speaker 1: were not called co CEOs either, just CEOs, and these 740 00:44:15,320 --> 00:44:17,880 Speaker 1: are the same two people who are CEOs of Oracle 741 00:44:17,960 --> 00:44:21,080 Speaker 1: to this day. Those two people were soft Ra Cats, 742 00:44:22,080 --> 00:44:25,879 Speaker 1: the person who had worked with Ellison years before as 743 00:44:26,200 --> 00:44:30,239 Speaker 1: sort of the the mouthpiece between Ellison and other important 744 00:44:30,320 --> 00:44:35,120 Speaker 1: leaders over at Oracle and Mark heard. Cats would oversee sales, 745 00:44:35,200 --> 00:44:38,680 Speaker 1: Herd's area would be business and service units, and Ellison 746 00:44:38,680 --> 00:44:42,200 Speaker 1: would oversee software and engineering. So yet again Oracle would 747 00:44:42,200 --> 00:44:44,920 Speaker 1: come under the direction of a triumvirate. This is very 748 00:44:44,920 --> 00:44:48,040 Speaker 1: similar to when Lane and Henley and Ellison would lead 749 00:44:48,040 --> 00:44:51,680 Speaker 1: the company in the nineties. The collective compensation for Ellison, 750 00:44:51,760 --> 00:44:53,920 Speaker 1: Cats and Heard, if you added it all up in 751 00:44:53,920 --> 00:44:59,600 Speaker 1: two thousand thirteen, was a hundred sixties six million dollars. Yikes, 752 00:45:00,480 --> 00:45:03,720 Speaker 1: adds a lot of cheddar. In two thousand and sixteen, 753 00:45:04,040 --> 00:45:07,480 Speaker 1: Oracle would acquire net Suite, which, as I mentioned earlier, 754 00:45:07,560 --> 00:45:11,600 Speaker 1: had received initial funding from Ellison almost two decades before that. 755 00:45:12,080 --> 00:45:15,399 Speaker 1: Net Suite added more features geared toward midsized companies, while 756 00:45:15,400 --> 00:45:18,440 Speaker 1: most of Oracle's products were aiming at larger enterprises. But 757 00:45:18,600 --> 00:45:20,719 Speaker 1: I did a whole episode of NetSuite just a few 758 00:45:20,719 --> 00:45:24,160 Speaker 1: episodes ago, so we're not going to retread that. And 759 00:45:24,480 --> 00:45:28,000 Speaker 1: Oracle continues to offer up a ton of products. It's 760 00:45:28,239 --> 00:45:31,480 Speaker 1: core still being database services, although there's been a lot 761 00:45:31,520 --> 00:45:35,840 Speaker 1: of articles recently saying that that business is slowly starting 762 00:45:35,880 --> 00:45:39,920 Speaker 1: to fade from prominence. But Oracle also offers up a 763 00:45:39,920 --> 00:45:43,400 Speaker 1: ton of these web enabled services that allow companies to 764 00:45:43,600 --> 00:45:47,560 Speaker 1: offload a lot of their back end processes onto these 765 00:45:47,560 --> 00:45:51,360 Speaker 1: web software packages, and that means that they still have 766 00:45:51,719 --> 00:45:55,040 Speaker 1: kind of an ongoing subscription based business that's an ongoing 767 00:45:55,120 --> 00:45:59,520 Speaker 1: way of generating revenue. And even if the database industry 768 00:45:59,640 --> 00:46:03,080 Speaker 1: ends up fading from prominence. They have this other business 769 00:46:03,200 --> 00:46:07,399 Speaker 1: that they've been really right there at the leading edge 770 00:46:07,400 --> 00:46:09,239 Speaker 1: of it since the beginning effect in front of the 771 00:46:09,320 --> 00:46:12,760 Speaker 1: leading edge, and in some cases where the company failed 772 00:46:12,800 --> 00:46:15,160 Speaker 1: to really capitalize on it because the world just wasn't 773 00:46:15,200 --> 00:46:18,040 Speaker 1: ready yet. But now that seems to be the way 774 00:46:18,040 --> 00:46:20,440 Speaker 1: a lot of companies are going, So Oracles still in 775 00:46:20,480 --> 00:46:23,280 Speaker 1: pretty good position. It just may mean that the core 776 00:46:23,440 --> 00:46:27,160 Speaker 1: of their business might shift from the database side to 777 00:46:27,960 --> 00:46:32,320 Speaker 1: this web enabled services side. I may do an episode 778 00:46:32,320 --> 00:46:35,560 Speaker 1: dedicated solely to Larry Ellison in the future, as his story, 779 00:46:35,560 --> 00:46:38,080 Speaker 1: while tightly coupled with Oracle, I've covered a lot of 780 00:46:38,080 --> 00:46:40,800 Speaker 1: it in these episodes. There's still a lot more twists 781 00:46:40,800 --> 00:46:43,759 Speaker 1: and turns in his story, including his launch of a 782 00:46:43,840 --> 00:46:47,880 Speaker 1: hydroponics company and his tendency to buy islands. It's kind 783 00:46:47,880 --> 00:46:51,200 Speaker 1: of cool not to mention his his various yacht racing 784 00:46:51,239 --> 00:46:55,319 Speaker 1: activities and other things. Also, Larry Ellison wanted at one 785 00:46:55,360 --> 00:46:58,120 Speaker 1: point to be the guy to put Steve Jobs back 786 00:46:58,160 --> 00:47:01,239 Speaker 1: in charge of Apple. Ellison had a lot of uh 787 00:47:01,640 --> 00:47:03,960 Speaker 1: still does have. He has a lot of really powerful 788 00:47:04,000 --> 00:47:06,600 Speaker 1: friends in the text sphere, and Steve Jobs was one 789 00:47:06,600 --> 00:47:09,759 Speaker 1: of them. And Ellison had thought that Job's got a 790 00:47:09,840 --> 00:47:12,040 Speaker 1: raw deal from Apple back in the day and he 791 00:47:12,040 --> 00:47:14,040 Speaker 1: wanted to put Jobs back in charge. Of course that 792 00:47:14,120 --> 00:47:18,360 Speaker 1: did happen, not necessarily with Ellison's direct involvement, but that 793 00:47:18,520 --> 00:47:22,080 Speaker 1: is sort of how things unfolded when Apple's board of 794 00:47:22,120 --> 00:47:27,600 Speaker 1: directors decided to give Steve Jobs the interim CEO job 795 00:47:27,640 --> 00:47:31,719 Speaker 1: before he actually assumed the formal CEO position a little 796 00:47:31,760 --> 00:47:34,440 Speaker 1: bit later. So there's a lot of stuff about Ellison 797 00:47:34,520 --> 00:47:38,080 Speaker 1: that I could cover that is, uh, not directly tied 798 00:47:38,120 --> 00:47:40,640 Speaker 1: in with his work with Oracle, but still very important 799 00:47:40,680 --> 00:47:43,200 Speaker 1: in the world of technology. So I may do that 800 00:47:43,239 --> 00:47:46,680 Speaker 1: in a future episode. But I want to ask you, guys, 801 00:47:46,719 --> 00:47:48,600 Speaker 1: what do you what do you want me to cover? Like, 802 00:47:48,680 --> 00:47:50,839 Speaker 1: what's what sort of topics would you be interested in 803 00:47:50,880 --> 00:47:54,240 Speaker 1: hearing more about. Whether it's a technology, maybe it's a company. 804 00:47:54,280 --> 00:47:57,000 Speaker 1: Maybe it's a person in tech who you would like 805 00:47:57,040 --> 00:47:59,480 Speaker 1: to hear more about. Maybe there's someone you would like 806 00:47:59,520 --> 00:48:01,439 Speaker 1: me to enter view or have on as a guest 807 00:48:01,520 --> 00:48:04,320 Speaker 1: host to talk about the topic. Send me a message. 808 00:48:04,480 --> 00:48:07,560 Speaker 1: My email address for this show is tech Stuff at 809 00:48:07,680 --> 00:48:10,400 Speaker 1: how stuff works dot com, or you can drop me 810 00:48:10,400 --> 00:48:12,759 Speaker 1: a line on Facebook or Twitter. The handle of both 811 00:48:12,800 --> 00:48:16,080 Speaker 1: of those is tech Stuff hs W. Remember we've gotten 812 00:48:16,120 --> 00:48:18,839 Speaker 1: Instagram accounts, so go over to Instagram and follow us 813 00:48:18,840 --> 00:48:21,160 Speaker 1: to see the behind the scenes stuff and other interesting 814 00:48:21,200 --> 00:48:24,239 Speaker 1: things that Crystal is always posting over there. And I 815 00:48:24,600 --> 00:48:29,719 Speaker 1: often will stream live my recording sessions of podcasts. I 816 00:48:29,800 --> 00:48:32,719 Speaker 1: do it at twitch dot tv slash tech Stuff, So 817 00:48:32,840 --> 00:48:36,400 Speaker 1: go there. You'll see the schedule for my recording sessions 818 00:48:36,719 --> 00:48:39,200 Speaker 1: and you can watch as I record these shows live. 819 00:48:39,280 --> 00:48:41,160 Speaker 1: You can join in the chat room and chat with 820 00:48:41,200 --> 00:48:43,840 Speaker 1: the other fans, and during the ad breaks, instead of 821 00:48:43,840 --> 00:48:46,000 Speaker 1: reading an ad, I come over there and I chat 822 00:48:46,040 --> 00:48:48,319 Speaker 1: with you guys to see how you're doing and to 823 00:48:48,800 --> 00:48:51,919 Speaker 1: hear your stories and to have conversations. So I hope 824 00:48:51,920 --> 00:48:53,799 Speaker 1: to see you in there, and I'll talk to you 825 00:48:53,840 --> 00:49:02,480 Speaker 1: again really soon. For more on this and thousands of 826 00:49:02,480 --> 00:49:14,520 Speaker 1: other topics, visit how stuff works dot com.