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Deep in the Heart of Texas: What Should Oracle Licensees Think About Oracle’s Move to Austin?

On December 11, 2020, Oracle Corporation announced that they will be moving corporate headquarters from Silicon Valley to Austin, Texas.

Oracle is far from alone: moving to the Lone Star State has recently been trending among tech companies and high-profile business titans, including Hewlett Packard Enterprise and Elon Musk, Tesla’s celebrated CEO. Notwithstanding this exodus, Oracle’s former CEO and cofounder Larry Ellison will not be joining the company in Texas. Ellison announced that he had already moved to Hawaii where he owns 98% of the island of Lanai.

Why the Move?

Oracle announced the news in a regulatory filing, stating that Oracle is putting into place a new policy that allows more flexibility regarding the work location of Oracle’s employees. The move of Oracle’s corporate headquarters from Redwood City, California, to Austin, Texas, positions the tech giant for optimal growth, according to Oracle, while purportedly providing its employees “with more flexibility about where and how they work.” Oracle’s filing stated that by enacting a “more modern approach to work”, Oracle expects to improve the quality of life of its employees along with quality of production.

Oracle has not yet stated how many jobs this will create in Austin or precisely when the move will take place. Currently, Oracle employs around 2,500 employees in the Austin area, according to the Austin Chamber of Commerce. Ellison had previously predicted that he expected the Austin campus to employ as many as 10,000 people, but this projection appears to have been prior to news of the change of corporate venue. 

One cannot help but wonder, why the move? Why now? And why to Texas? Some have noted that high real estate taxes along with a high cost of living have driven some companies and executives to leave California. And at least in the case of Elon Musk, the threat to move to Texas began in May when officials would not allow his car company to reopen its factory due to the Covid-19 pandemic. 

Texas Gov. Greg Abbott believes it is the state’s “friendly business climate” and “low taxes” that are drawing companies in. The Austin Chamber of Commerce estimates that at least 39 companies in tech and other industries have made the move to Austin in 2020 alone. Austin’s reputation as a liberal hub with a high population (47%) of educated people can’t hurt, either. (We also can’t help but point out, as we have written about previously, that Oracle’s public support of the Trump administration has made it an anomaly in Northern California and has put it at odds with many of its employees.)

Will Oracle Change its Forum Selection/Choice of Law?

It is impossible to predict whether this move will accompany a change — for better or for worse — in Oracle’s infamously aggressive auditing and licensing policies. However, we do note that the Oracle Master Agreement  clearly chooses California law to govern and mandates jurisdiction and venue in San Francisco and Santa Clara counties:

13. GOVERNING LAW AND JURISDICTION

The Master Agreement is governed by the laws of the State of California and You and Oracle agree to submit to the exclusive jurisdiction of, and venue in, the courts in San Francisco or Santa Clara counties in California in any dispute arising out of or relating to the Master Agreement.

We are curious to see if, with Oracle’s change in corporate venue, the Oracle Master Agreement will change its Governing Law and Jurisdiction provision. As we have noted before, Oracle has been extremely hesitant to litigate its licensing and auditing practices, with the Mars v. Oracle matter (which we filed in San Francisco Superior Court) being dismissed with prejudice prior to any substantive rulings. If Oracle were contemplating introducing a litigation strategy to its auditing practices, is it too far-fetched to wonder if it would consider Texas a more hospitable forum for its deeply unpopular audit script?

Without making any predictions, we do recommend that Oracle licensees be on the lookout for a revised Master Agreement and watch out for any Oracle attempt to replace their current controlling agreement with a revised one through renewal of Technical Support or otherwise.  

Published on 12/18/2020

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