1. U.S. v. Oracle Corp. Economic Issues Dan Wall Latham & Watkins LLP

2. FunctionSystemSolutions Ties together disparateAccenture, IBM, Cap Gemini, computing environmentsEDS, In-House, Others Performs business SAP, Oracle, PS, Others processes Runs programs (Java, C),IBM, Microsoft, BEA integrates multiple programs,Oracle, SAP, JBoss, Others manages user security Stores dataOracle, IBM, Microsoft, (e.g., invoices, orders,Sybase, MySQL, Others personnel records) Runs logic for hardwareUnix, Windows, Linux Mainframe MVS, Others Hardware on which softwareIBM, Sun, Dell, applications runHP, Others Modern Computing Environment Server Computers Operating Systems Database Application Server Enterprise Applications Software ( “ EAS ” ) Systems Integration Services

3. SUPPLIERSSUPPLIERS CUSTOMERSCUSTOMERS  Financial management  Human resources  Central procurement  Executive information / decision support systems Corporate Administration The “ Back Office ” EAS Within the Enterprise Customer Interface  Product marketing / support  Field service & support  Order entry  Sales management  Customer information systems  Product configuration Supply Chain  Advanced planning & scheduling  Supply chain inventory visibility  Warehouse / inventory mgmt  Transportation  International trade systems Manufacturing  Resource planning  Maintenance, repair, operations  Engineering/design  Product data management  Production management

4. Financial Management Systems (“FMS”) Applications FMS Applications  General ledger (“GL”)  Accounts payable (“A/P”)  Accounts receivable (“A/R”)  Asset management  Treasury management  Travel and expense management  Others …

5. HR Applications  Human resources  Payroll  Time & attendance  Benefits  Compensation  Training  Learning  Performance appraisal  Others … Human Resources (“HR”) Applications

6. Industry Verticals  Federal Government  State and Local Government  Education  Healthcare Providers  Financial Services  Retail  Communications  Utilities  Professional Services  Process Manufacturing  Discrete Manufacturing  Agriculture & Mining

7. Stack Competition Operating System Database Middleware Suite Development Tools Applications Consulting Services Windows MS SQL Server.NET Visual Studio.NET Partners Linux Database 10g Application Server 10g Oracle Tools / J2EE Oracle Consulting Linux DB2 WebSphere Rational / WebSphere IBM GlobalServices Linux MySQL and others NetWeaver NetWeaver / J2EE SAP Consulting Partners E-Business Suite Microsoft Business Solutions mySAP Partners J2EE JBoss/Apache MySQL Linux

8. Real Competition: The Stack D5822R

9. A Non-Starter In FMS

10. Or In HRMS

11. Getting to DOJ’s Market  Cut out the “Mid-Market” DOJ focuses on the very largest corporations in the world. Thousands of large enterprises are excluded from the market – because they indisputably turn to other vendors. <2000 Companies 10-15,000 Companies

12. 200 Word Market Definition

13. Price Discrimination  A constant DOJ theme, but: Price discrimination in the form of different, customer-specific pricing was simply noted, not explained. Price discrimination market definition theory was not pursued. DOJ never established that having fewer choices translated to unfavorable treatment.

14. The Secret (Better?) Market

15. SAP Will Remain the Leading Firm  FMS SAP Worldwide FMS Revenues: $1.06 billion Sum of Oracle and PeopleSoft:$673 million Source: IDC, Sept. 2003 (D5543)  HRM SAP Worldwide HRM Revenues: $514 million Sum of Oracle and PeopleSoft:$652 million Source: IDC, July 2003 (D5815)  “ERP” (EAS Suites) SAP Worldwide ERP Revenues: $5.0 billion Sum of Oracle and PeopleSoft:$3.1 billion Source: IDC, May 2004 (D5572)

16. “Localized Competition” Theory “Reality” (Assuming 3-firm market) From Oracle’s Opening Statement

17. ERP Vendor Market Positioning Vertical Scope Customer Size PeopleSoft Oracle Lawson SAP AMS Microsoft

18. Sources of Customer Leverage  Lost enterprise bids are very costly. Variable costs are low; lost revenue is lost profit.  Follow-on business. More modules, pillars, infrastructure needs.  Reference value.  Control of key information. They can learn what is important about vendors while concealing what is important about them.  A credible “do nothing” option.

19. Nothing Critical Will Change  One or two firms negotiating with buyer.  Buyers with leverage that don’t need to buy at all.  Buyers can conceal their reserve price and vendor preferences.  Seller costs of losing are huge; price discrimination is very risky.  Unchanged TodayPost-Merger From Oracle’s Opening Statement