Cisco challenges European approval of Microsoft’s Skype deal

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Network giant seeks to prevent Microsoft from strengthening its position in Web-based video calling market.

Cisco Systems Inc. challenged the European Commission’s approval of Microsoft Corp.’s $8.5 billion Skype acquisition, seeking to prevent Microsoft from tightening its grip on Web-based video calling.
Wednesday, Cisco said the commission should have placed conditions on the deal requiring systems such as Skype’s video-calling service to operate with competing platforms. Cisco said it doesn’t oppose the merger over all.
“Imagine how difficult it would be if you were limited to calling people who only use the same carrier or if your phone could only call certain brands and not others,” Marthin De Beer, senior vice president of Cisco’s emerging-business group, wrote in a blog post Wednesday. A Microsoft spokeswoman said the company is “confident the commission’s decision will stand up on appeal.”
Cisco Chief Executive John Chambers repeatedly has said increased use of video communication will be an important technological trend in coming years. The appeal to the General Court of the European Union could help the San Jose, Calif., networking-equipment company defend its turf in that area, but at the peril of its relationship with Microsoft as a supplier, customer and partner.
“Our goal is to make video calling as easy and seamless as email is today,” De Beer said Wednesday.
The EU’s antitrust watchdog in October cleared Microsoft’s proposed acquisition of Skype, the Internet voice and video communication provider. The merger, which closed a week after European approval, was one of Microsoft’s priciest acquisitions, at $8.5 billion, and is seen as an attempt by Microsoft to expand in the mobile-device market.
An appeals process could take years, Hillard Sterling, a partner at Lewis Brisbois Bisgaard & Smith LLP, said. Sterling isn’t involved in the case.
While companies sometimes settle such matters,”Microsoft is very used to lengthy cases that impose burdens and huge attorneys’ fees,” Sterling added.”It certainly has gained a tolerance for riding through these cases and not being intimidated by the costs and burdens.”
Video was one of five priorities Cisco identified alongside its corporate restructuring last year. The company has sought to drive sales of communications gear and virtual workspaces that allow businesspeople to see each other while they talk.