EU tells Cisco Microsoft-Skype deal won't hurt competition

Cisco reminded that Microsoft's market share may be 'ephemeral' as it loses ground in the mobility space

The European Court of Justice (ECJ) has thrown out Cisco's complaints that Microsoft's acquisition of Skype will harm competition in the industry.

It is almost two years since the European Commission (EC) first ruled that the Skype buyout would not harm competition and was "compatible with the internal market". Cisco, alongside VoIP provider Messagenet, filed a complaint with the EC this spring that alleged the deal would have "anti-competitive effects" on the communications market.

In June Cisco chief executive John Chambers told CRN that he believed the merger would "damage the industry".

"[The Skype acquisition] will not just [affect] our large peers, but the smaller players too," he added. "It damages competition and creates unfair advantages."

But an ECJ ruling published yesterday throws out Cisco and Messagenet's claim "in its entirety", explaining that there is a marked difference between the consumer and the enterprise communications market, with the latter still dominated by Cisco.

"That circumstance considerably reduces Microsoft's ability to impede competition on that market," explains the judgement.

The judgement also points out that the speed of innovation in the technology sector means that today's king of the hill may be tomorrow's also-ran.

"The consumer communications sector is a recent and fast-growing sector characterised by short innovation cycles in which large market shares may turn out to be ephemeral," says the judgement. "Moreover, Microsoft, which has traditionally held a very large share of the PC software market, is less present on new operating devices, such as tablets and smartphones, which are becoming increasingly important on the consumer communications market."