Cisco Seeking Nullity of Microsoft-Skype deal

May 29
9:12 AM 2013

The globe's largest network equipment manufacturer, Cisco Systems Inc, had filed suit in an EU court last Wednesday seeking the annulment of the approval provided for the purchase of Skype by Microsoft. Cisco claims that the decision by the EU would allow for the creation of an eventual monopoly.

The challenge was filed at the EU General Court in Luxembourg after the European Commission approved of the US$8.5 billion transaction last 2011. Without the imposition of requirements for concessions imposed upon Microsoft, Cisco claims that the purchase of the Internet video and messaging company provided Microsoft and Skype an unfair advantage over other companies.

About one third of the voice calls from all over the world are done on Skype, with over 280 million users utilizing the service at a rate of more than 100 minutes each month. These were figures divulged by Microsoft's COO Kevn Turner last March alone. At the time of the transaction, Skype had 'only' 170 million users.

This is a seminal case as VOIP and video messaging has become a large emerging industry, with many individual and corporate users veering away from traditional fixed line and mobile communications platforms. This is the specific area that Cisco hoped to corner and expand in, which unfortunately had dwindled allegedly due to Microsoft/Skype deal.

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