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Cisco Challenges Microsoft, Skype Merger In EU

Wed, 02/15/2012 - 2:19pm
Gabriele Steinhauser, AP Business Writer

BRUSSELS (AP) — 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.

The European Commission, the EU's competition regulator, cleared the takeover in October and the merger was completed later that month. Microsoft Corp. hopes that owning Skype will allow it to better compete across platforms 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.

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.

Cisco wants the General Court of the EU to check whether the Commission was right in clearing the Skype takeover without any concessions. 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.

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.

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