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Court dramatic events: Oracle intimidates customers to use its cloud, nine people familiar with the truth

via:博客园     time:2019/6/6 17:01:50     readed:458

Pension fund litigation may reveal evidence of fraudulent sales practices.

Oracle and a well-known pension fund are fighting a protracted lawsuit, and Oracle has artificially exaggerated the focus of cloud revenue. The severity of this lawsuit has just improved.

In April of this year, database giant Oracle refuted the allegation: coercing customers who use on-premise software to pay cloud subscription fees, threatening to review software licenses and penalties, artificially exaggerating cloud revenue.

In August 2018, the Senais City Fire Brigade Pension Fund filed a complaint against Oracle, which was revised in March this year to list Lianfeng Asset Management Holdings, the investment arm of the German Central Bank of China Group, as the chief plaintiff; see this situation, Oracle asked the judge to hear the case to dismiss the lawsuit.

In response to the request for refusal, Oracle stated that its cloud revenues were in line with expectations for each quarter between March 15, 2017 and June 19, 2018; unsubstantiated allegations from a few former employees did not meet the filing requirements. .

The plaintiff’s allegations against Oracle’s documents indicate that “Oracle’s allegedly illegal practice includes Oracle’s waiver of contractual rights to fines customers who violate the license, provided that the customer purchases a cloud product. In addition, Oracle allegedly gives customers a substantial discount on other products when they purchase cloud products. ”

Oracle argues that its sales strategy is justified, claiming that the accusation “does not indicate why selling in that way would seriously mislead investors...”

Oracle further argues that although the plaintiffs claim that the company's sales strategy is not correct, they “cannot cite any laws, accounting rules or policies that prevent companies from encouraging existing customers to try new products. ”

Nine knights

Last week, those who sued Oracle struggled to counterattack, insisting that the company financially orders orders to exaggerate cloud revenue and cloud growth. These so-called cloud orders are said to not represent actual customer demand and are misleading for investors.

The plaintiffs argued in the response: “Oracle coerced customers to false & lsquo; purchase & rsquo; short-term cloud subscription service. In fact, these are not actual cloud sales: these customers are buying exemptions from the strict audit penalties associated with Oracle's on-premise software, or the discounts on the on-premise software itself. ”

The plaintiff claimed that Oracle used two sales methods to drive up cloud sales. The first strategy is the ABC strategy, which is auditing, bargaining, and closing. This includes installing the on-premises software in a way that could lead to a customer breach of the license agreement. It is alleged that Oracle subsequently conducted an audit and threatened to impose a hefty fine. If a customer purchases a short-term cloud subscription service, the company allows the customer to be exempt from the license breach of liability.

The second strategy involves “add-on transactions”: If a customer purchases a short-term cloud subscription service, Oracle offers customers a discount on on-premise software. It is said that within Oracle, this type of transaction is called “financially engineered deals”.

To support these claims, the plaintiffs invited nine former Oracle executives to appear in court. For example, the response file refers to the vice president of cloud sales in North America, where he claims that 90% to 95% of his team's sales are from financial engineering transactions. "The file also claimed that the executive "who saw the direct reports to [CEO Mark Hurd] directly wrote that 90% to 95% of Oracle's cloud sales are not used at all. . ”

Oracle did not respond to a request for comment. IT Foreign Media The Register The first time this lawsuit was filed, Oracle media director Deborah Hellinger said: “The lawsuit has no legal basis; Oracle will actively defend to refute these claims. ”

Crazy fine pushes cloud purchases

Nathan Biggs, chief executive of IT of the House of Brick Technologies, said in a telephone interview with The Register on Wednesday that the allegations against Oracle are consistent with what he heard from Oracle customers.

He said: "All these allegations fully confirm what we have seen repeatedly from customers who are defending against Oracle audits. Oracle does not seem to use auditing as a compliance activity, but instead seems to use this as a revenue-generating activity. ”

Biggs said that the database company will propose a solution to the customer; if the customer does not agree to buy what the salesperson wants to sell, the salesperson will contact the audit team to initiate the audit.

This type of audit is to audit Oracle software and see which features are available for charging—and by default these features are often enabled, potentially resulting in tens of millions or even hundreds of millions of dollars in violations.

Biggs said he knew a customer was being asked to pay $500 million. “Oracle doesn’t seem to be planning to pay that much, but it seems to scare the customer. Therefore, when Oracle proactively signs a sales order with a 25% amount of this amount and then joins the cloud service, the customer feels that it is a good deal. ”

He added that most of his company's customers have purchased short-term cloud subscription services, but they have not renewed and may never have actually used them.

Biggs said that customers are tired of this tough sales approach, and many customers say they want to stop using Oracle software. He said: "Many customers can stop using it, but most customers can't" because the cost and damage of dropping and replacing Oracle software is beyond the range they want to bear. “Customers don’t like their technology, and they don’t like the way Oracle treats them. ”

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