The European Commission is gathering information about Oracle’s software-licensing practices as European competition regulators consider whether there is evidence warranting a formal antitrust investigation.
There is no formal case against Oracle at present and no finding that the company has broken European competition law. The Commission has nevertheless confirmed that it is continuing to monitor possible anti-competitive practices and abusive conduct in the sector, while a person familiar with the matter told Reuters that third parties are being approached for information specifically concerning Oracle.
For Scotland, this is not remote corporate news from Brussels.
Since October 2024, the Scottish Government and 32 other public bodies have been running core HR, finance and purchasing functions through Oracle Cloud. Payroll, staff records, purchasing, supplier processes and important flows of public money now depend upon an American technology company whose licensing practices are attracting regulatory attention at the same time as Oracle undertakes one of the largest and most heavily financed infrastructure expansions in its history.
The issue is not whether Oracle is about to disappear. Its business remains enormous and profitable.
The more difficult question for Scotland is what happens when a government becomes deeply dependent upon one commercial supplier and later discovers that leaving, negotiating or resisting changes imposed by that supplier may be considerably harder than entering the relationship was.
Europe Is Looking at the Part of Oracle That Matters to Scotland
The European interest in Oracle is particularly relevant because it concerns licensing.
Enterprise software licensing sounds technical until an organisation has built essential operations around the software. At that point, the licence determines what can be used, by whom, under what circumstances, for how long and at what price.
The European Commission’s information-gathering follows another competition case involving German software giant SAP. That matter ended in July after SAP offered concessions intended to make it easier for customers to terminate contracts or move to competing service providers.
Reuters reported on 1 September that Oracle’s licensing practices were now on the regulators’ radar in a similar context.
The Commission could find nothing requiring further action. Equally, the information exercise could become the foundation of a formal case.
For Scotland, even the preliminary scrutiny raises an obvious question: what protections were secured before the Government concentrated essential corporate functions on Oracle’s platform?
That question becomes more important with every additional Scottish organisation moved onto it.
Scotland Has Already Crossed the Point of a Simple Software Purchase
Oracle Cloud went live across the Scottish Government and 32 public-sector organisations on 1 October 2024.
This was not merely the purchase of a database or office application.
The platform replaced or absorbed functions previously performed by separate systems covering human resources, recruitment, overtime, flexitime, finance and purchasing.
The organisations brought onto the shared platform include bodies operating in some of the most important parts of Scottish administration.
The Scottish Government has also sought money specifically to accelerate the onboarding of further organisations. An Invest to Save proposal requested £4 million for expansion of the Oracle Cloud shared-service model and described it as an Enterprise Resource Planning platform integrating core business processes.
The direction is therefore towards greater concentration, not diversification.
Every successful migration may create efficiencies. It can also increase the cost of ever reversing the decision.
A government with one Oracle department has alternatives.
A government with dozens of organisations sharing Oracle processes, Oracle-trained staff, Oracle data structures, Oracle integrations, Oracle reporting tools and Oracle workflows faces a radically different calculation.
The Original £22 Million Estimate Became £64 Million
The Scottish Government’s own March 2026 closure report provides an unusually candid account of how the programme developed.
The original April 2022 cost estimate was £22.4 million to £26 million including VAT.
By September 2023 it had been rebaselined to £46 million to £52 million.
By March 2024, after the planned launch was delayed, the estimate had reached £63 million to £66 million.
The eventual implementation cost to 31 March 2025 was £59.5 million after VAT recovery. A further £4.5 million was identified for Enterprise Performance Management work, taking the stated total delivery cost to £64 million.
That does not mean Oracle itself received £64 million. The programme cost includes the wider work required to implement the platform.
But it demonstrates how far the financial consequences of a major enterprise-system decision can travel from the original estimate.
The Government’s own post-implementation report acknowledges the role of “optimism bias” in those earlier estimates.
It also states something equally significant: the fundamental reason for replacing the old systems was “operational necessity”, not efficiency savings.
Scotland did need to replace ageing systems.
That is important because the argument is not that government should have kept obsolete software indefinitely.
The question is whether Scotland secured sufficient protection against becoming too dependent upon the company selected to replace it.
Problems Continued After the Programme Was Declared Delivered
Oracle went live in October 2024, but implementation did not end the problems.
The Scottish Government’s closure report says defects continued to be resolved between January 2025 and January 2026, with flexitime and time-card problems among the most persistent.
The Government said those issues required collaboration with Oracle to develop solutions.
Enterprise Performance Management was not ready for the October launch and was removed from Phase 1 altogether. It became a separate project with further releases extending into 2026.
The official report also acknowledges outstanding defects in Time and Labour.
Those problems matter because payroll and working time are not peripheral functions. Errors can translate into employees receiving incorrect pay, overtime not being processed properly or staff having to spend working time correcting administrative records.
FOI disclosures subsequently exposed considerable frustration among Scottish Government employees over Oracle. Some complained about overtime, time recording, unresolved tickets and the effort required to correct apparently routine matters.
Those comments are individual experiences rather than a statistical measure of overall system performance. But they sit alongside the Government’s own acknowledgement of defects and continuing stabilisation work.
The scale of support demand was considerable.
The Government says approximately 84,000 support tickets were raised during Oracle Cloud’s first year.
It also reports about four million logins and £51 billion of payments during that period, demonstrating both how heavily used the system has become and how significant its role now is.
The Costs Did Not Stop at Implementation
By July 2025 the Scottish Government said it was unable to provide a reliable forecast for Oracle’s annual running costs because the system had not yet experienced a stable business-as-usual year.
Support expenditure and licence usage were still fluctuating.
When Audit Scotland officials appeared before Parliament in December, the picture had become clearer.
They said costs since implementation had been running at approximately £1.6 million a month.
The Government expected that figure eventually to fall to approximately £900,000 a month once the platform stabilised.
At £1.6 million a month, the annualised rate is £19.2 million.
At £900,000, it is £10.8 million.
Those figures should not be compared mechanically with the old systems because Oracle combines functionality previously spread over separate systems and operates under a different software-as-a-service model.
But they make the future commercial terms extremely important.
The Government no longer merely needs Oracle to work.
It needs Oracle to remain affordable.
Then Came Another £55 Million Contract
In March 2026, the Scottish Government awarded IBM UK a contract associated with Oracle systems integration and support carrying a published value of £55 million excluding VAT.
That £55 million should not be described as money already spent. The procurement value accommodates work, potential expansion and the contractual scope over its lifetime.
Its purpose is nevertheless revealing.
The published description covers further stabilisation, optimisation and potential expansion of the Oracle platform, including additional customers and modules.
Approximately a quarter of the work was expected to be subcontracted.
Scotland therefore emerged from the original implementation not by reducing dependence on the Oracle ecosystem but by procuring another substantial support vehicle capable of extending it.
That may be entirely rational if Oracle is delivering the best available service.
It also means that changing direction becomes progressively harder.
Oracle Itself Is Taking a Huge Financial Bet
While Scotland has been embedding Oracle into government, Oracle has been transforming its own business around cloud computing and artificial-intelligence infrastructure.
The scale is difficult to overstate.
Oracle’s capital expenditure rose from $21.2 billion in its 2025 financial year to $55.7 billion in 2026, principally because of data-centre expansion.
Its operating cash flow remained very large, at roughly $32 billion, but capital expenditure was so much larger that free cash flow turned sharply negative.
More consequential still are the commitments extending years into the future.
At 31 May 2026 Oracle disclosed approximately $260 billion in additional lease commitments, substantially all connected with data-centre arrangements. Those leases generally run for 15 to 19 years and had not yet commenced, meaning they were not included as lease liabilities on the balance sheet at that date.
By 31 August, the figure had risen to $288 billion.
Oracle also disclosed another $34.15 billion of unconditional purchase and other obligations, principally associated with cloud-infrastructure components and data-centre power.
These are extraordinary commitments even for one of the world’s largest technology companies.
Oracle is not hiding the risk.
Its securities filings warn investors that if customer demand is lower than expected, or major customers fail to perform under their contracts, the company could be left carrying data-centre capacity and associated costs without the anticipated revenue.
That warning comes from Oracle itself.
Debt Has Grown Alongside the Expansion
Oracle has been financing part of this infrastructure expansion through borrowing.
During its 2026 financial year it issued tens of billions of dollars of senior notes. Non-current borrowings increased markedly as the company accelerated construction of cloud and AI capacity.
In July, S&P Global Ratings downgraded Oracle from BBB to BBB-, leaving its rating one level above speculative-grade status. The downgrade was linked to the scale of the company’s investment requirements and increased leverage associated with AI infrastructure expansion.
That is not a declaration that Oracle is financially distressed.
Oracle remains profitable, maintains tens of billions of dollars in cash and continues to report rapidly expanding cloud business.
But it does mean the company that Scotland increasingly depends upon is simultaneously taking one of the largest capital-allocation bets in corporate technology.
The risk for Scotland is not necessarily insolvency.
Commercial pressure can matter long before a supplier is anywhere near insolvency.
A Data Centre in New Mexico Exposed the Physical Limits of the Cloud
The word “cloud” can make digital infrastructure sound detached from physical constraints.
Oracle’s experience in New Mexico demonstrates otherwise.
In September, Oracle invoked a force-majeure provision connected with Project Jupiter, a huge planned data-centre development intended to support OpenAI workloads.
The issue concerned delays in obtaining sufficient electrical power.
Oracle maintained that the project remained on schedule, but the episode exposed the relationship between enormous computing commitments and the electricity networks, construction schedules, financing structures and planning systems required to support them.
The financial markets noticed.
Reuters subsequently reported pressure around approximately $18 billion of debt connected with the project as investors examined Oracle’s increasing leverage and the risks surrounding large-scale AI infrastructure development.
None of that interrupted Scottish payroll.
But it matters because Scottish government services now rely increasingly on a corporation whose strategic priorities and capital requirements are being transformed by AI infrastructure projects of unprecedented scale.
Scotland is a customer inside that much larger commercial strategy.
Wisconsin Asked Who Should Carry Oracle’s Risk
The Wisconsin case raises another issue that Scotland should understand.
Oracle became involved in plans for a major data-centre development requiring vast amounts of electricity infrastructure.
Wisconsin regulators imposed financial protections intended to reduce the danger that ordinary electricity customers could eventually be left paying for infrastructure constructed for enormous data-centre users if those users failed, withdrew or significantly reduced demand.
Oracle challenged the requirements in court.
The dispute concerned potentially substantial financial guarantees.
Oracle later withdrew the lawsuit.
There is nothing improper about a company challenging regulations it believes impose unreasonable costs.
What the case illustrates is more useful: sophisticated corporations negotiate aggressively over where risk sits.
Wisconsin regulators attempted to place more infrastructure risk on the enormous commercial customer rather than the general public.
Oracle resisted.
Scotland’s equivalent question concerns software rather than electricity.
When Oracle’s interests and Scotland’s interests cease to align perfectly, what does the contract say?
Oracle Has a History Governments Cannot Reasonably Ignore
Corporate history does not prove future conduct, and enforcement cases elsewhere do not demonstrate wrongdoing in Scotland.
They are nevertheless relevant when assessing a supplier entrusted with critical government functions.
In 2011 Oracle agreed to pay the United States Government $199.5 million plus interest to settle a False Claims Act case involving a federal software contract.
The US Department of Justice alleged that Oracle had failed to meet contractual obligations concerning disclosure of its commercial discounting practices and the prices available to government purchasers.
It was, at the time, the largest False Claims Act settlement obtained by the US General Services Administration.
That case is particularly relevant to Scotland because it concerned the sale of software and technical support to government.
There is also a repeated anti-corruption enforcement history.
In 2012 the US Securities and Exchange Commission charged Oracle over secret side funds maintained through its Indian subsidiary. Oracle settled.
A decade later, the SEC charged Oracle for a second time under the Foreign Corrupt Practices Act.
In that 2022 case, Oracle agreed to pay more than $23 million after the SEC found that subsidiaries in Turkey, the United Arab Emirates and India had created and used off-book funds, including funds used in connection with foreign officials.
Those cases do not establish any improper conduct involving the Scottish Government.
They do establish that Scotland is dealing with a corporation whose commercial history merits serious due diligence rather than unquestioning dependence.
Scotland Has Already Experienced an Oracle Security Scare
There is another episode worth remembering.
In March 2025 reports emerged of an alleged compromise involving Oracle Cloud infrastructure.
Oracle denied that Oracle Cloud customers had experienced a breach or loss of data.
Internally, however, the Scottish Government took the reports seriously enough for its Cyber Security team to recommend precautionary action.
Documents later released under FOI show officials briefing ministers, the Permanent Secretary and others about the allegations. The Scottish Cyber Coordination Centre engaged with the UK National Cyber Security Centre and UK Government Cyber Coordination Centre.
Officials reported that they had found no evidence that Scotland’s environment had been breached.
That distinction is important: there is no evidence in those records that Scottish Government Oracle data was compromised.
The episode nevertheless showed the practical consequences of concentration.
When an allegation concerns the platform supporting HR, finance and purchasing across the Scottish Government and 32 other bodies, the potential blast radius is no longer confined to one department.
“Adopt, Not Adapt” Changes More Than Software
One of the most revealing passages in the Government’s own review concerns what it calls the “adopt, not adapt” principle.
The intention is straightforward: rather than heavily customise Oracle to reproduce every old Scottish Government process, organisations should adopt standard Oracle processes wherever possible.
There are strong technical reasons for doing that. Heavy customisation makes upgrades difficult and expensive.
But the institutional consequence deserves attention.
Software stops merely supporting the organisation and starts shaping how the organisation operates.
This was already apparent in smaller public bodies, where the Government’s report acknowledges difficulties applying Oracle’s segregation-of-duties model because smaller organisations do not necessarily have enough employees to divide responsibilities in the way the system anticipates.
Processes may therefore change partly because the commercial platform expects them to.
That is not unique to Oracle. It is a characteristic of large enterprise-resource-planning systems.
It is nevertheless a form of dependence.
Oracle Can Change While Scotland Must Keep Running
The old Scottish systems could remain relatively static for years between major upgrades.
Oracle Cloud does not.
The Government says the platform receives quarterly updates and regular monthly patches.
That delivers new features and security improvements.
It also means Scotland has accepted continuous change controlled partly by the supplier’s product timetable.
Oracle can alter interfaces.
Oracle can change modules.
Oracle can change licensing arrangements.
Oracle can reorganise support.
Oracle can decide which products receive investment.
Oracle can change commercial priorities.
Scotland still has to run payroll on Friday.
That asymmetry is the part of cloud dependence that is easiest to overlook during procurement.
The Greatest Risk Does Not Require Oracle to Fail
There is no sound evidence that Oracle is approaching corporate collapse, and claiming otherwise would obscure the much more credible risk Scotland actually faces.Oracle does not have to fail for Scotland to encounter serious difficulties. It merely has to become expensive to challenge. Imagine the position several years from now if considerably more of Scotland’s public sector has migrated onto Oracle.
At that point, a theoretical right to move supplier is very different from a practical ability to do so. The question is no longer whether the data can be exported.It is whether an entire working government can be reconstructed somewhere else without disrupting pay, procurement, grants, accounts, staffing and public administration. That exercise could take years and cost very large sums. If no realistic exit exists, commercial negotiating power has shifted.
The Question Scotland Has Not Yet Answered Publicly
The European Commission may ultimately decide that Oracle’s licensing practices require no competition action. Oracle’s enormous AI investments may deliver precisely the returns the company anticipates. Its data centres may be completed, its debt remain manageable and its cloud business continue expanding rapidly. Those outcomes would not remove Scotland’s underlying exposure. The central question is not whether Oracle succeeds. It is whether Scotland can function independently of Oracle if circumstances change.
The Scottish Government has published detailed explanations of why it selected Oracle, how implementation proceeded, what went wrong, what the project cost and how benefits are expected to develop. What remains far less visible is the exit plan.
Europe is examining Oracle’s licensing practices. Oracle is carrying hundreds of billions of dollars of future data-centre commitments, borrowing heavily to fund a massive AI expansion, confronting power and financing constraints around major projects and restructuring parts of its business while Scotland continues to widen its use of Oracle Cloud.
None of those facts, individually or together, proves that Scotland’s system is unsafe. They establish something narrower and harder to dismiss. Scotland has concentrated essential administrative functions in a commercial platform whose future pricing, licensing, infrastructure, support and corporate strategy Scotland does not control. The more government that is moved onto it, the greater the consequences if Scotland ever discovers that it wants to leave.
Sources
Oracle licensing practices on EU antitrust regulator’s radar
Reuters, 1 September 2026
https://www.reuters.com/legal/litigation/oracle-licensing-practices-eu-antitrust-regulators-radar-source-says-2026-09-01/
Shared Services Programme: Phase 1 Programme Closure Report
Scottish Government, 23 March 2026
https://www.gov.scot/publications/shared-services-programme-phase-1-programme-closure-report/
Scottish Government HR System Oracle Information: FOI Release
Scottish Government, 22 September 2025
https://www.gov.scot/publications/foi-202500468811/
Total Cost of Oracle Cloud Implementation: FOI Release
Scottish Government, 18 August 2025
https://www.gov.scot/publications/foi-202500471968/
Data Breaches of the Oracle System: FOI Release
Scottish Government, 22 July 2025
https://www.gov.scot/publications/foi-202500462497/
Invest to Save Fund Proposals: FOI Release
Scottish Government
https://www.gov.scot/publications/foi-202500472741/
Public Audit Committee Official Report
Scottish Parliament, 17 December 2025
https://www.parliament.scot/chamber-and-committees/official-report/search-what-was-said-in-parliament/pa-17-12-2025?iob=143297&meeting=16777
Oracle Systems Integration and Support Contract Award
Public Contracts Scotland, 13 March 2026
https://www.publiccontractsscotland.gov.uk/search/show/search_view.aspx?ID=MAR551656
Oracle Corporation Annual Report, Form 10-K, year ended 31 May 2026
US Securities and Exchange Commission
https://www.sec.gov/Archives/edgar/data/1341439/000119312526277521/orcl-20260531.htm
Oracle Corporation Quarterly Report, Form 10-Q, quarter ended 31 August 2026
US Securities and Exchange Commission
https://www.sec.gov/Archives/edgar/data/1341439/000119312526389274/orcl-20260831.htm
Oracle, Blue Owl project delay sends ripples through AI financing
Reuters, 24 September 2026
https://www.reuters.com/business/energy/oracle-blue-owl-project-delay-sends-ripples-through-ai-financing-sources-say-2026-09-24/
Oracle’s $18 billion data center debt under pressure
Reuters, 18 September 2026
https://www.reuters.com/business/finance/oracles-18-billion-data-center-debt-under-pressure-ft-reports-2026-09-18/
Oracle Agrees to Pay U.S. $199.5 Million to Resolve False Claims Act Lawsuit
US Department of Justice, 6 October 2011
https://www.justice.gov/archives/opa/pr/oracle-agrees-pay-us-1995-million-resolve-false-claims-act-lawsuit
SEC Charges Oracle a Second Time for Violations of the Foreign Corrupt Practices Act
US Securities and Exchange Commission, 27 September 2022
https://www.sec.gov/newsroom/press-releases/2022-173
SEC Charges Oracle Corporation With FCPA Violations Related to Secret Side Funds in India
US Securities and Exchange Commission, 16 August 2012
https://www.sec.gov/newsroom/press-releases/2012-2012-158htm
