Oracle Sued Over Alleged License and Sales Practices Used to Sell Cloud

Oracle lawsuitOracle is known for its hard-charging sales teams and for its aggressive LMS audit team that is famous for using unwritten “rules” and policies as a way to compel their customers to pay Oracle millions of dollars in license fees and cloud fees. Whether its City of Denver, Mars, Specsavers, or the thousands of other business that have fallen victim to these practices, Oracle’s reputation is well deserved. In the past, we’ve talked about Oracle’s practice of using audits to compel customers to buy cloud services the customer does not want to buy. We call this Oracle’s ABC audit practice: Audit. Bargain. Cloud.

Pushing the envelope like Oracle does, it’s only a matter of time before customers fight back. Mars sued Oracle over an audit gone bad. Palisade had a front row seat during that brouhaha as we directly worked with Mars through that entire process. Now comes word of another lawsuit. This one is slightly different, but, if the allegations are true, it is more evidence of Oracle using their licensing and contracting as a way to sell more cloud services, even when a customer does not want those cloud services.

A&E Adventures has filed a class action suit against Oracle in the Florida Circuit court. You can read the entire complaint in a PDF here. The issues stem from Oracle’s acquisition of Micros. Micros is a point of sale solution many companies use to take payments from customers. It’s basically the cash register hardware and software. Needless to say, that’s pretty important for a company like A&E that runs/owns multiple store locations. No cash register…no cash…no business. Well A&E alleges that once Oracle bought Micros, everything went downhill. There were problems with the systems that Oracle was unable to fix. Here is the important part. According to A&E, not only was Oracle unable to fix the system, Oracle actively worked against the customer’s efforts to get the systems online and upgraded.

First, Oracle allegedly took away the client’s “Red Keys.” The Red Keys contain the software code that Micros customers can use to upgrade their systems. These are keys that A&E says they paid for. Copies of contracts are attached to the end of the complaint. According to the complaint “Oracle, however, has advised Plaintiffs that — despite the express licenses granted by the Micros Sales Contracts…it is Oracle’s position that Plaintiffs lack valid licenses.” Oracle just refused to recognize the customer was licensed, and, there is nothing in the complaint saying that Oracle tried to sell them more licenses.

Second, according to A&E, they attempted to bring in a third party consultant to repair the Micros systems. That third party wanted Oracle to confirm that A&E was licensed, but Oracle refused to provide that confirmation. The result was that the third party would not do the repairs. You can see clearly, in A&Es view, Oracle is using their position of holding the licensing information to stifle A&Es efforts to get back up and running.

So why would Oracle put so much pressure on a good client, who paid their bills, and just wanted to use the Micros solution they had always used? Well, that answer is also in the complaint. According to A&E, “Oracle has purposefully and knowingly engaged in a deliberate and purposeful scheme to force owners of RES 3700 [Micros] to abandon that system and upgrade (at a substantial cost) to Oracle’s subscription-based Simphony Point-of-Sale system.” Now, just to connect the dots back to cloud, Oracle describes Simphony as “the premiere cloud and mobile hospitality management platform.”

Remember that a complaint like this is only one side of the story. Oracle hasn’t responded, testimony hasn’t been given and there is really nothing on the record other than A&E’s version of what happened. I’m sure Oracle will have a different view on what’s happened. Having said that, if these allegations are true, it’s very clear evidence once again of Oracle using licensing and contracts as a hammer over customer’s heads to sell cloud services. It makes you wonder how much of Oracle’s cloud revenue is generated by these activities? No one knows. In fact, I don’t think Oracle knows. The activities described by A&E were not that of an official audit. In fact, these were probably sales and support people just doing what they were told to do.

Oracle staff puts amazing pressure on their customers to buy Oracle cloud. This pressure includes audits, compliance, upgrade pressure, and more. We can only hope A&E’s lawsuit actually goes to trial with a verdict. That will surely shed more light on Oracle’s behavior and maybe even on their cloud ambitions.