Oracle Policy Change Raises Prices on AWS

News came last week that Oracle has, in effect, doubled the price for running its products on Amazon's cloud. It has done so with a bit of sleight-of-hand on how it counts AWS's virtual CPUs. It also did so without fanfare. The company's new pricing policy went in effect on January 23, and pretty much went unnoticed until January 28, when Oracle follower Tim Hall stumbled on the change in Big Red's "Licensing Oracle Software in the Cloud Computing Environment" document and blew the whistle.

At first glance, this move might not seem to mean much, as it only puts Oracle's AWS pricing on par with its prices on Microsoft Azure. But Azure is only about a third the size of market leading AWS, so if you want to make money selling licenses in the cloud, AWS is the place to be. And while this move may or may not affect those already using Oracle on AWS -- it's not clear whether the new rules apply to those already using the products -- it will certainly push some new users who might otherwise consider Oracle to look elsewhere.

The main reason for this move is obvious. Oracle is hoping to make its own cloud more attractive -- which led The Register to observe with a bit of snark, "Larry Ellison did promise Oracle's cloud would be faster and cheaper." Faster and cheaper both remain to be seen. Faster maybe, if Oracle's SPARC cloud launches as planned and if it performs as advertised. Cheaper might be less likely. Oracle is known for playing hardball with its prices.

With declining sales of its signature database and business stack, and with its $7.4 billion dollar bet on Sun not working out as planned, Oracle is betting its future on the cloud. But Oracle came late to the party and its efforts so far seem to be returning lackluster results, with some financial forecasters not seeing a bright future for Oracle Cloud. The cloud is a crowded market, they say, and the big four -- Amazon, Microsoft, IBM and Google -- already have a commanding lead.

That's true. But the biggest obstacle Oracle faces in the cloud is...well, Oracle. Its reputation precedes it.

It's an understatement to say the company is not known for stellar customer service. Indeed, press reports paint Oracle as something of a bully and a manipulator.

Back in 2015, for example, Oracle, evidently growing frustrated because its cloud wasn't growing as fast as anticipated, began activating what Business Insider called the "nuclear option." It would audit a client's datacenter and if the client wasn't in compliance, it would issue a "breach notice" -- usually reserved only for cases of large scale abuse -- and order the client to quit using its software within 30 days.

In case you don't know, big corporations heavily invested in Oracle's stack absolutely couldn't migrate to another solution on such short notice. An Oracle breach notice spelled disaster.

"[T]o make the breach notice go away — or to reduce an outrageously high out-of-compliance fine — an Oracle sales rep often wants the customer to add cloud "credits" to the contract...," Business Insider's Julie Bort explained.

In other words, Oracle was using the audit to arm-twist clients to buy into its cloud, whether or not they had a need. There might also be a tie-in between this tactic and the recent price doubling on AWS. A commenter to Hall's article noted that the purpose behind the secrecy surrounding the price boost could possibly be to trigger software audits.

The trouble with employing tactics like these is that sooner or later they catch up with you. Word gets out. Your customers start looking for other options. It might be time for Big Red to take a page from Microsoft's playbook and start working to build a kinder and gentler Oracle that puts the needs of its customers first.