Cisco appeals against Microsoft’s acquisition of Skype - 21/02/2012
Cisco Systems Inc. has launched an appeal against the acquisition of the internet communications service Skype by Microsoft which took place in May 2011.
The original acquisition was valued at £5.4bn and saw Skype join other Microsoft enterprises such as Xbox Live, Xbox Kinect and the Windows Phone. Its previous owners included eBay, equity firms Silver Lake and Andreessen Horowitz,
and the original founders of Skype Niklas Zennstrom and Janus Friis.
After the parties finalised the terms of the deal, the European Union announced in October 2011 that the takeover would not be contrary to competition laws. However, US giant Cisco has launched an appeal against the takeover under
the premise that the European Commission ought to have imposed stricter conditions to allow for greater harmonisation of video-conferencing software.
Current video-calling applications are being hampered due to the fact that the programs that Skype and other providers offer are incompatible with one another. Cisco contends that both open standards and increased harmonisation
of video-conferencing software was the focus of their appeal in order to "make video calling as easy and seamless as email is today."
Martin De Beer, head of Cisco's video conferencing division, commented that "the European Commission should have placed conditions that would ensure greater standards-based interoperability".
Concerns have been raised that without this greater "interoperability" Microsoft's acquisition of Skype (known as "Microsoft Skype") may restrict competition against providers such as Google Video, Cisco's "WebEx" and Apple's "FaceTime".
Microsoft released a statement in response in which it notes that "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." Skype currently has over 650 million users.
To discuss how we can provide further advice in connection with these issues, please contact Keith Kennedy, a Partner in our Corporate Team, by email to
keithk@berg.co.uk or alternatively you can call Keith on 0161 833 9211.
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