Oracle is facing a legal threat after a lawsuit has alleged the company used ‘threats and extortive tactics’ when selling its cloud products.
The City of Sunrise Firefighters’ Pension Fund is suing Oracle for allegedly misleading shareholders and ‘misrepresenting the true drivers of [its] cloud revenue growth.’
“Defendants falsely attributed the company’s revenue growth in its cloud segment to a variety of factors and initiatives, including, among other things, Oracle’s “unprecedented level of automation and cost savings”, as well as the company being “customer-focused” and “intimate partners with our customer””, the document stated. “In truth, Oracle drove sales of cloud products using threats and extortive tactics.”
As an example, the document alleged that Oracle threatened customers with audits of their non-cloud-based software until they agreed to take on a cloud license.
The document added that this practice became clear on March 19 2018, which was around the time of Oracle’s third quarter financial results. According to those results, cloud revenues went up 32% year over year and represented 16% of the company’s overall revenue. Despite this the financial press reported mixed results and stocks fell. The document alleged that ‘analysts and market commentators connected Oracle’s poor financial performance to its improper sales tactics.’
Much of Oracle’s announcements in recent months has been around its autonomous database and associated features. At an event in California last week, Oracle CTO and executive Larry Ellison unveiled autonomous transaction processing (ATP) capabilities, based on a specific database type.
According to the document, the use of such tactics, including around automation, “concealed the lack of real demand for Oracle’s cloud services, making the growth unsustainable and ultimately driving away customers.”
Oracle has responded to the claims, with Deborah Hellinger, head of communications, saying: “The suit has no merit and Oracle will vigorously defend against these claims.”
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