EU court upholds Microsoft's Skype acquisition; rejects Cisco's challenge

Despite legal bids by Cisco to scupper the deal, a top EU court has approved the merger. But the video conferencing giant can still appeal the ruling.
Written by Zack Whittaker, Contributor
Image: Microsoft/Skype

Two years after Microsoft bought Skype for $8.5 billion, a top EU court has approved the acquisition, ending any bid by rival Cisco to scupper the deal — at least for now.

First reported by Reuters, the Luxembourg-based European General Court upheld a decision by European regulators allowing the acquisition, despite claims by the rival networking giant that the deal would push out the competition, notably itself.

In May, Cisco argued Microsoft's acquisition of Skype would create a monopoly and that the European Commission was wrong to approve the deal without forcing the company to offer concessions.

Later in May, live on CNBC, Cisco chief executive John Chambers said he didn't want to see the deal annulled, but he wanted "interoperability," adding that such protocol sharing "allows the Internet to grow."

But the court on Wednesday said Cisco failed to show how the deal would adversely affect competition in the voice and video calling space.

"The merger does not restrict competition either on the consumer video communications market or on the business video communications market," according to the judges, who said the deal was "compatible with the internal market."

Cisco can appeal to the European Court of Justice, however. The networking giant has not stated yet whether it will or not.

A spokesperson told ZDNet the company said it was "disappointed" that the court did not require the Commission to revisit interoperability factor. It added: "We remain committed to interoperability and will continue to work to make video calling as easy as making a phone call or sending an email."

"We are hopeful that in the interest of customers and consumers, Microsoft and others in the industry will join us and continue to rally around this ideal and work together to achieve an open, interoperable video community," the spokesperson added.

The European Commission said in a statement it "welcomes" the judgment, saying it "confirms that the Commission was correct in its assessment that the acquisition... would not significantly impede effective competition."

In spite of Microsoft-Skype's 80-90 percent combined market share, it was "not indicative of market power," given that the service on the most part is free. 

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