Cisco’s Mood Message: Not Happy With Microsoft/Skype Deal; Appealing To EU

As one big tech merger gets approved by the EU, another might get kicked back into play. Today, Cisco launched an appeal against the purchase of Skype by Microsoft, a deal that was originally unconditionally approved by the regulators back in October 2011.

The appeal hinges on Cisco’s contention that Microsoft and Skype will limit how users of different video calling systems will be able to speak to each other. Cisco is being joined in its appeal by Messagenet, another video conferencing provider that stands to lose out if a dominant Microsoft/Skype team begin to roll out video calling products using Microsoft’s Lync platform.

According to a source close to Cisco, TechCrunch understands that Cisco put in its complaint at the last possible minute — the deadline for objections is tomorrow, Wednesday.

The source also tells TC that the reason it waited until the last minute was because it was trying to negotiate directly with Microsoft to come to an agreement on common standards.

“Microsoft argued during the commission’s review of Tandberg [which Cisco bought in 2010] that there should be conditions of interoperability,” the source said. “Cisco waited because it has been in ongoing discussions with Microsoft and it could reach business terms without making the appeal. But Microsoft was not ready to sign up.”

TC has reached out to Microsoft for comment and will update this post with its response. Update: In an emailed statement, a spokesperson from Microsoft said it believed the original approval, in which Cisco participated, would stand:

“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.  We’re confident the Commission’s decision will stand up on appeal.”

Marthin DeBeer, the SVP of Cisco’s emerging business group, argues in a blog post that this is not about Cisco trying to quash the merger altogether — Microsoft is also an important partner and customer to Cisco — but to get the EU to put more conditions on it going through, to enforce more interoperability.

“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,” he writes.

Although a fair number of enterprises use video conferencing services, the technology has not been significantly commercialized for the mass-market, with companies like Skype, Apple, Google and many others offering free services. At issue here is how this may play out as a business in the future: “Microsoft’s plans to integrate Skype exclusively 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,” DeBeer argues.