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Halt! Cisco Block Microsoft’s $8.5B Skype Takeover

The IT giant has appealed to the European regulators decision to approve the $8.5bn Microsoft/Skype merger to the General Court of the European Union, Marthin De Beer, Cisco’s Senior Vice President, Emerging Business Group, confirmed yesterday.

“We did not take this action lightly,” he added, but his company is clearly worried about the implications the deal would have on Cisco’s business video conferencing and tele-presence systems, and the expansion of Skype VOIP platform to Microsoft operated PCs.

In other words, Cisco fears its network systems widely used in corporate markets may be pushed out of reach if Microsoft, who have a stranglehold on desktops operating systems, introduce a Skype-only compatible conferencing system into future Windows versions and enterprise software.

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The EU approved the Microsoft’s takeover of the European owned Internet calling service last October, which currently has almost  700 million registered users although many do not pay a cent for the service. Skype also comes with long term debt to the tune of $686m.

Microsoft CEO Steve Ballmer previously said the purchase – Microsoft’s biggest ever – will allow his software company “be more ambitious, do more things.”

However, De Beer insists his company does not oppose the merger per se, rather wants the European Commission to place greater checks and balances on the $8.5bn deal to ensure fair competition between players and VOIP industry standards stay open.

“Cisco 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.”

It fears Microsoft’s plans to integrate Skype 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, says De Beer.

“We respect the European Commission, and value Microsoft as a customer, supplier, partner, and competitor,” but added:    “imagine how difficult it would be if you were limited to calling people who only use the same carrier or if your phone could only call certain brands and not others.”

However, Microsoft says it is confident the merger will go ahead unopposed:

“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,” the Redmond based giant said in a statement.

De Beer also called on the industry and vendors to “to rally around open standards.”

“Cisco believes that the right approach for the industry is to rally around open standards.”