Cisco challenges Microsoft takeover of Skype in EU

Feb 15, 2012 By GABRIELE STEINHAUSER , AP Business Writer
Microsoft CEO Steve Ballmer (L) shakes hands with Skype CEO Tony Bates during a news conference in San Francisco, in 2011. US networking giant Cisco filed an appeal on Wednesday of the European Commission's approval of Microsoft's $8.5 billion takeover of Internet voice and video leader Skype.

Networking company Cisco said Wednesday that it is challenging Microsoft's $8.5 billion takeover of Skype at the European Union's top court to ensure Microsoft won't block other video conferencing services.

Microsoft completed the deal in October shortly after the European Commission, the EU's competition regulator, cleared the takeover. Microsoft Corp. hopes that owning Skype will allow it to better compete with other tech giants including Apple Inc. or Google Inc.

But for Cisco Systems Inc., the world's largest maker of computer networking equipment, the Skype deal creates a serious challenger to its video conferencing systems.

"Cisco does not oppose the merger, but believes the European Commission should have placed conditions that would ensure greater standards-based interoperability," Marthin De Beer, the head of Cisco's video conferencing division, wrote in a blog post.

Video conferencing equipment is a relatively small part of Cisco's overall sales, but it's growing rapidly. Cisco's latest major acquisition was of Tandberg, a Norwegian maker of video conferencing equipment. Cisco spent $3.4 billion for the company in 2010.

Microsoft said it was confident it would prevail in an appeal.

"The European Commission conducted a thorough investigation of the acquisition, in which Cisco actively participated, and approved the deal in a 36-page decision without any conditions," Microsoft said in a statement.

Microsoft is counting on Skype to help it catch up in some the hottest markets in technology and media. Microsoft is looking to grow in areas such as online socializing, mobile phones and digital video to reduce its traditional reliance on its Windows and Office software for revenue.

The U.S. Department of Justice approved the deal in June. Its approvals can't be appealed, while the European Commission does accept appeals.

Cisco wants the General Court of the EU to check whether the Commission was right in clearing the Skype takeover without any conditions. It argues that the Commission should have required Microsoft to guarantee open standards for video conferencing, similar to what exists for mobile phone calls.

Such standards would eventually allow users of Cisco video phones to make calls to users of Skype and other services like Google Voice.

De Beer said that without these standards, Microsoft could "seek to control the future of video communications."

"Making a video-to-video call should be as easy as dialing a phone number," De Beer wrote. "Today, however, you can't make seamless video calls from one platform to another, much to the frustration of consumers and business users alike."

But Cisco fears that Microsoft will end up blocking Skype for users of other services, especially if it starts charging businesses for teleconferencing. Its filing came just ahead of a deadline for appeals.

Skype, with roughly 170 million users, is by far the most popular voice-over-Internet service.

Antoine Colombani, a spokesman for the European Commission, said it will defend its decision in court.

Cisco's stock fell 19 cents to $19.88 in afternoon trading Wednesday, while Microsoft's fell 17 cents to $30.08.

Explore further: Yahoo sees signs of growth in 'core' (Update)

4 /5 (2 votes)
add to favorites email to friend print save as pdf

Related Stories

EU approves Microsoft's Skype takeover

Oct 07, 2011

European anti-trust officials approved on Friday US technology giant Microsoft's $8.5-billion takeover of Internet voice and video leader Skype.

Skype scrambles after service trouble

May 26, 2011

Skype on Thursday was scrambling to fix a problem that caused the globally popular Internet telephone service to be inaccessible for a "small number" of users.

Skype getting new chief executive from Cisco

Oct 04, 2010

(AP) -- Skype is replacing its CEO with a Cisco Systems executive, a change that may indicate the Internet calling service is closer to announcing specific plans for an initial public offering.

Recommended for you

Yahoo sees signs of growth in 'core' (Update)

9 hours ago

Yahoo reported a stronger-than-expected first-quarter profit Tuesday, results hailed by chief executive Marissa Mayer as showing growth in the Web giant's "core" business.

Intel reports lower 1Q net income, higher revenue

9 hours ago

Intel's earnings fell in the first three months of the year amid a continued slump in the worldwide PC market, but revenue grew slightly because of solid demand for tablet processors and its data center services.

Twitter buys data analytics partner Gnip

12 hours ago

Twitter says it has bought its data partner Gnip, which provides analysis of the more than 500 million tweets its users share each day—to advertisers, academic institutions, politicians and other customers.

Zebra to spend $3.45B on Motorola business

16 hours ago

Zebra Technologies is spending more than $3 billion to buy the enterprise business of Motorola Solutions in a considerable expansion that is both technological and geographical.

Relativity's last-minute bid for Maker rebuffed

21 hours ago

Relativity Media, a film financier and movie distributor, was rebuffed in a last-minute bid for Maker Studios, the YouTube video creator that had agreed to be bought by The Walt Disney Co. last month.

User comments : 1

Adjust slider to filter visible comments by rank

Display comments: newest first

hagger
1 / 5 (1) Feb 16, 2012
no more free calls...

More news stories

Intel reports lower 1Q net income, higher revenue

Intel's earnings fell in the first three months of the year amid a continued slump in the worldwide PC market, but revenue grew slightly because of solid demand for tablet processors and its data center services.

Low Vitamin D may not be a culprit in menopause symptoms

A new study from the Women's Health Initiative (WHI) shows no significant connection between vitamin D levels and menopause symptoms. The study was published online today in Menopause, the journal of The North American Menopa ...

Astronomers: 'Tilt-a-worlds' could harbor life

A fluctuating tilt in a planet's orbit does not preclude the possibility of life, according to new research by astronomers at the University of Washington, Utah's Weber State University and NASA. In fact, ...