Cisco appeals EU's okay of Microsoft/Skype deal

Cisco Systems Inc has challenged EU clearance of Microsoft Corp's acquisition of Internet voice and video service Skype at Europe's second highest court, saying the commission should have put tougher conditions on the deal.

"Cisco does not oppose the merger, however 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," Cisco said on Wednesday.

The EU's General Court

Cisco launched its appeal in the EU's General Court by common consent with Italian fixed-line and voice over Internet protocol telephone provider Messagenet SpA, a Skype rival.

Cisco, whose core business is routers and switches that manage the Internet, is betting on future growth in video, which Chief Executive John Chambers has said will be the future of communication.

Microsoft-only platform

Cisco argued that Microsoft's plan to integrate Skype exclusively into its Lync Enterprise Communications Platform could lock-in businesses that want to reach Skype's 700 million account holders to a Microsoft-only platform.

"Imagine how difficult collaboration 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," Cisco said.

The wisdom of Microsoft's acquisition

Investors at first questioned the wisdom of Microsoft's acquisition, especially its high price tag, however have been warming up to the decision, thinking Microsoft would be making a smart move buying advanced communications research it could put into its products, along with acquiring a ready base of users.

Skype, which appointed ex-Cisco manager Tony Bates as its chief executive officer in 2010, popularized the VoIP (Voice over Internet Protocol) method of using a computer as a telephone. It is the clear leader in the market, with 145 million users who sign in for the time being once a month.