24 June 2004 Microsoft’s attempt to buy applications giant SAP earlier this year was prompted by fears that it would lose important sales in the database market, a Microsoft executive told a court yesterday.

The executive, Doug Burgum, was giving evidence during a case brought by the US government, which is attempting to prevent database and applications software company Oracle from taking over its rival PeopleSoft.

Burgum’s evidence revealed that Microsoft feared that, once it took control, Oracle would entice PeopleSoft customers to switch from Microsoft’s database products to Oracle’s. PeopleSoft applications currently work with both Microsoft and Oracle databases, while Oracle applications only run on Oracle databases.

Microsoft also feared that, if it did not bid for SAP, then IBM might.

Oracle is attempting to persuade the court that its takeover of PeopleSoft would not harm competition in the high-end applications market. Its case appeared to be strengthened yesterday when Richard Knowles, vice president of SAP North America, testified that he believes that Microsoft plans to enter the large-scale business applications market and compete with market leaders SAP and Oracle. Microsoft already offers business applications software to smaller customers.

Knowles’s testimony was supported by evidence in the form of SAP internal memos and emails. He said he believed that, in the event of a successful bid for PeopleSoft, Oracle would offer more competitive prices when bidding against SAP.

The Department of Justice (DoJ) last week argued that Microsoft is only interested in selling software to smaller companies, not in the larger enterprises where SAP specialises. The argument was backed by testimonies from Microsoft executives.

Oracle lawyers believe that Microsoft’s merger talks with SAP late last year and earlier this year prove that Microsoft has plans to break into the high-end of the applications market — which is at the centre of the DoJ’s argument.