Oracle Lands In More Hot Water Over Ads That Slam IBM — And Now The FTC May Investigate

Business Insider

View gallery

.
Larry Ellison

Business Insider/Julie Bort

Oracle CEO Larry Ellison

You know how Oracle likes to tout that its servers are so much faster, better, cheaper than IBM's? Well, some of those claims, made in advertisements, have landed Oracle in hot water. Again.

On Thursday, one of the advertising industry's self-regulation bodies, the National Advertising Division,  asked the Federal Trade Commission to step in and investigate Oracle's ads for "possible law enforcement action," it said.

View gallery

.
Oracle Ad T5

Enterprise Management 360

Oracle ad that appeared in the Wall Street Journal

NAD has been asked to judge the truth of other Oracle ads in the past and it ruled in favor of IBM.

"Now, IBM has brought NAD’s attention to a fourth Oracle advertising campaign," NAD said in a press release it sent us.

In this one Oracle says its new SPARC T5 has “2.6x Better Performance” as compared to IBM’s Power7+ AIX server."

NAD says, "the advertising in question features the same stark, overbroad IBM-versus-Oracle comparison that NAD recommended against in the three previous cases."

So instead of arguing with Oracle about it, NAD wants to get the feds involved.

Oracle stands by its ad. An Oracle spokesperson told us:

 "Oracle disagrees with the decision and believes the ad is fair and accurate. The ad provides a clear and objective comparison between an IBM Power7+ AIX system and an Oracle SPARC T5 system using industry standard benchmark results that legitimately show 2.6x better performance by the Oracle system. NAD has failed to take into account the sophistication of the ad's target audience, namely businesses that purchase enterprise hardware systems."

We reached out to IBM for comment.

Here's the full press release from NAD.

Maybe it's just us, but it seems like this press release just oozes NAD's frustration at Oracle.

NAD Refers Advertising by Oracle to FTC After Company Repeatedly Fails to Comply with NAD Recommendations

New York, NY – Aug. 1, 2013 – The National Advertising Division has referred advertising claims made by Oracle Corporation to the Federal Trade Commission, following NAD’s determination that the company has not made a good faith effort to comply with the recommendations of previous NAD decisions.

NAD is an investigative unit of the advertising industry’s system of self-regulation. It is administered by the Council of Better Business Bureaus.

NAD has reviewed three separate Oracle advertising campaigns in 2012, each featuring an overbroad and unsupported comparison between one Oracle product and one IBM product. Each campaign was reviewed by NAD following a challenge by International Business Machines (IBM).

In response to each challenge, Oracle sought to support broad implied claims that the Oracle line of products was superior to the IBM line by relying on the results of testing of one specific Oracle configuration against one specific IBM configuration. In each instance, NAD rejected the advertiser’s substantiation and recommended that the claim be discontinued.

NAD published its first decision regarding Oracle’s advertising in April 2012, and the second in July 2012. Oracle appealed NAD’s July 2012 findings to the National Advertising Review Board (NARB), which affirmed NAD’s decision. NAD examined a third Oracle campaign in October 2012.

Now, IBM has brought NAD’s attention to a fourth Oracle advertising campaign, featuring the claim that Oracle’s SPARC T5 has “2.6x Better Performance” as compared to IBM’s Power7+ AIX server.

The advertisement contrasts IBM’s with Oracle’s server and relies on the results of testing one particular configuration of the Oracle SPARC T5 against one particular configuration of IBM’s Power7+ AIX server to support an overall superiority claim for the Oracle line of products.

NAD has determined that the advertising in question features the same stark, overbroad IBM-versus-Oracle comparison that NAD recommended against in the three previous cases.

NAD’s decision notes that given "Oracle's repeated failure to make a good faith effort to bring its advertising into compliance with the guidance of both NAD and NARB, NAD referred this matter to the appropriate governmental agency for possible law enforcement action."



More From Business Insider

Rates

View Comments (3)