Cisco goes to court to annul Microsoft’s Skype acquisition

By Sooraj Shah
30 May 2013 View Comments
Cisco logo in purple

Cisco has raised the stakes in its fight against Microsoft's $8.5bn (£5.3bn) acquisition of Skype, claiming that European Union regulators who approved the deal have effectively created a monopoly in internet voice communications. 

Microsoft finalised the deal for Skype in October 2011, but in February last year, Cisco said that it planned to appeal against the European Commission's approval of the deal due to concerns around video-calling interoperability.

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In a blog, Cisco had raised concerns of Microsoft's plans to integrate Skype exclusively with its Lync Enterprise Communications platform, stating that this could create vendor lock-in. 

The European Commission had said that there were no competition concerns, but Cisco has now asked the second-highest EU court to annul the Commission's approval of Microsoft's big-money purchase. 

The video communications market is becoming increasingly important for vendors with both consumers and businesses shifting from fixed lines and mobile voice communications to online voice and video applications instead.

Cisco's lawyer, Luis Ortiz Blanco, told judges at the EU court that the Microsoft acquisition "marked a tipping point in the video communications market".

He continued: "The merger created an effective monopoly and condemned competitors to a niche. The reasoning applied [by the Commission] incurred numerous errors."

The Commission's lawyers were unconvinced by Cisco's argument, stating that other participants have not been deterred from entering the market, such as Google Talk and Viber Media.

"Other technologies are emerging. If these succeed, it may render Skype a relic," one of the commission's lawyers said.

But Blanco said that the EU has failed to show that users are able to easily switch from one platform to another, Bloomberg reported.

"If you can already reach everybody on Skype, why should you switch to different applications," he asked.

Cisco is appealing alongside Italian telecoms company Messagenet, with a decision expected in the coming months. Their verdict could be appealed to the EU's highest court, the European Court of Justice. 

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