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Cisco Says Microsoft Should Not Have Been Allowed to Buy Skype

by on29 May 2013 2019 times
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When Microsoft bought Skype it was to deal with a couple of issues. One of the big ones was to remove a competitor in the communications market and the other was to make sure they were not going to get sued for the direction their own communications services were taking. Microsoft had been floundering in the consumer market despite the multiple changes they tried to make to their messenger product. While their enterprise messaging software was complicated and expensive to maintain and to properly integrate with other messaging services. To combat this Microsoft was already looking to make their messaging services much more like Skype than they were.

For a while Live Messenger, and Office Communication server were use the SIP (Session Initiation Protocol), but the infrastructure was much less dynamic and secure (there were many issues that allowed someone to breach or take over authentication or transfer nodes in the network). Buying Skype for a huge pile of cash fixed all of this and allowed Microsoft to push Lync out the door. The EU agreed to allow this purchase much to the dismay of Skype and Messenger users and also to many competitors. While users were more concerned with how badly Microsoft might screw up Skype the competition was more concerned about handing Microsoft a dominant marketing position in a neat package.

Now Cisco (yes the networking company) is stepping up and filing a complaint with the EU General Court in Luxembourg saying that the commission that approved the buyout in October of 2011 did not do their job right. There were no concessions in the deal that allowed Microsoft to buy up Skype and purchase what almost amounts to a monopoly. What is concerning to Cisco is not the messaging portion of Skype, but the VoIP calling and video communication. Skype is the most popular VoIP Service in the world and once Microsoft got their hands on it they had an almost 90% market share.

Now other companies are concerned that Microsoft will shut them out of Windows and other Microsoft Operating Systems. Considering that Microsoft now has both the back office and the consumer space covered with their Lync/Skype they can slowly shove out companies Like Cisco, Carousel, Google and many others. The fact that Microsoft has shown that they are not concerned with backwards compatibility this is not an unfounded fear for Cisco and others. They claim that the EU Commission should have taken this into account and required concessions from Microsoft or not allowed the deal at all.

If Cisco prevails the deal will be annulled and there is sure to be some serious fall out from it. However the General Court has not overturned all that many decisions made by the EU commission so there is a good chance Microsoft might be able to keep Skype for now. We do not think that Cisco will give up that easily and may push their case to the European Court of Justice if they need to. We will be sure to keep an eye on this one.

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Last modified on 29 May 2013
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