Following a challenge from IBM Corporation, the National Advertising Division of the Council of Better Business Bureaus (NAD) has recommended that Oracle stop making “certain comparative performance and pricing claims” about one of its computer systems and systems made by competitor IBM.

The ads at issue claimed Oracle’s T4-4 server was 2x faster and 66% cheaper than IBM’s comparable P795 server.

As part of its inquiry, NAD examined the following express and implied advertising claims regarding the SPARC SuperCluster T4-4 computer system:

  • Express claims: Oracle’s system “runs Oracle & Java twice as fast as IBM’s fastest computer, [identified by Oracle as] the IBM P795 server,” and Oracle’s system costs $1.2 million compared to the P795 server costs $4.5 million.
  • Implied claims: Oracle’s computer system runs all Oracle and Java software products twice as fast as all of IBM’s Power 795 server designs (including all TurboCore mode designs), and Oracle’s computer system runs all Oracle and Java software products twice as fast as any IBM computer.

Given that Oracle and IBM both make “high-quality computer systems for businesses,” the main issue before NAD was whether or not Oracle’s express and implied claims “conveyed a truthful, accurate, and non-misleading message regarding the performance and price of Oracle Corporation’s SPARC SuperCluster T4-4 computer systems compared to the featured IBM computer system.” 

Based on the evidence, NAD concluded that a reasonable interpretation of Oracle’s “twice as fast” claim is that Oracle’s computer system “runs all Oracle and Java applications twice as fast as any IBM computer configuration in the Power 795 line” – a claim that was not supported by [Oracle’s] evidence and could not be cured by the disclosure at [its] Web site. Specifically, Oracle disclosed on its Web site: “Sources for Comparison of Systems: Systems cost based on server, software and comparable storage list prices (without discounts), as well as third party research. Performance comparison based on Oracle internal testing, together with publicly available information about IBM Power 795 TurboCore system with highest processor speed commercially available (4.25 GHz) as of Sept 28, 2011.”

In its decision, NAD recommended that Oracle stop advertising its SPARC SuperCluster T4-4 as running “Oracle and Java twice as fast as IBM’s fastest computer.” In addition, to prevent any potential misunderstanding about the $4.5 million price tag for the IBM Power 795 system, NAD recommended that Oracle disclose in the “main body” of its advertisements that IBM’s price includes “a separate storage unit.” NAD further recommended that Oracle give consumers “the specific model and configuration of the IBM Power 795 [and] the assumed prices for both units.”

Oracle issued an Advertiser’s Statement disagreeing with certain portions of NAD’s findings. Nonetheless, Oracle noted that it “wishes to inform the NAD that the advertisement at issue in this proceeding has been discontinued and Oracle does not intend to disseminate it in that form in the future. Oracle supports the NAD and the self regulatory process, and will take the NAD’s concerns into account should it disseminate the advertisement in the future.”

To read NAD’s decision, click here.

Why it matters: NAD’s review of IBM’s challenge against Oracle serves as a reminder for advertisers to carefully review their advertisements for implied and express claims. Advertisers should be extra careful to ensure the veracity of their statements in advertisements when making comparative reference and pricing claims regarding specific competitor products, especially when mentioning the competitor and its product in the advertisement.