Cisco Objects to Microsoft’s Skype Deal Before European Commission

Cisco Systems will appeal the European Commission€™s approval of Microsoft€™s Skype acquisition, potentially kicking off a messy legal battle between tech behemoths.

€œWe respect the European Commission, and value Microsoft as a customer, supplier, partner, and competitor,€ Marthin De Beer, senior vice president of Cisco€™s Video and Collaboration Group, wrote in a Feb. 15 posting on the company€™s corporate blog. €œCisco does not oppose the merger, but believes the European Commission should have placed conditions that would ensure greater standards-based interoperability, to avoid any one company from being able to seek to control the future of video communications.€

In other words, Cisco wants interoperability between its products and those of the combined Microsoft-Skype entity, particularly when it comes to the enterprise and small and midsized businesses (SMBs): €œMicrosoft€™s plans to integrate Skype exclusively with its Lync Enterprise Communications Platform could lock-in businesses who want to reach Skype€™s 700 million account holders to a Microsoft-only platform.€

The European Commission asks as an antitrust regulator and enforcer, with significant power within the European Union. Microsoft has locked horns with it before over the presence of Internet Explorer on Windows 7.

Microsoft formally closed its $8.5 billion Skype acquisition in October, making the communications company a division within its already-sprawling corporate structure. Former Skype CEO Tony Bates, now president of Microsoft€™s Skype unit, reports directly to Microsoft CEO Steve Ballmer.

Microsoft had previously indicated that it would continue to support Skype on non-Microsoft client platforms. Before Cisco stepped in, the acquisition had already placed Microsoft on a collision course with Google and its own voice over IP (VOIP) services. In May 2010, Google purchased Global IP Solutions, or GIPS, which makes software for processing high-definition audio and video over the Web, for $68.2 million. A few months later, the search-engine giant began offering its Gmail customers the ability to make phone calls through that service.

By purchasing Skype, Microsoft at the very least removed the company as a potential acquisition target for Google. And integrated with mobile Microsoft offerings like Windows Phone 7, Skype could end up also challenging Apple, which offers video conferencing through its FaceTime service for iOS.

Skype€™s services could certainly pump up Microsoft€™s bottom line. €œLocal phone numbers, three-way video conferencing, business administration, and making calls to real phone numbers are all things that people will pay for,€ Forrester analyst Ted Schadler wrote in a May 2011 posting on his corporate blog, soon after the deal was announced.

But now, it seems as if Cisco wants its say in Microsoft€™s strategy going forward.

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