Microsoft Corporation (MSFT), Cisco Systems, Inc. (CSCO): Skype Case Opens

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Microsoft Corporation (NASDAQ:MSFT) got approval from the European Union to buy Skype for $8.5 billion more than a year ago. But as we reported here Tuesday, there are a couple of companies who are none to pleased about the acquisition and are letting the court system know about it. Cisco Systems, Inc. (NASDAQ:CSCO) worked alongside an Italian firm to file suit challenging the EU approval of the Skype acquisition on anti-competition grounds. Earlier today, Cisco Systems made its opening case in this lawsuit, which is seeking to invalidate the EU approval and throw a wrench into the acquisition, which is all but finalized as Microsoft is integrating Skype into its enterprise tools as we speak (or write, as the case may be).

While the EU court system rarely overturns the decision of an EU commission when it comes to acquisitions like this – no such event has been overturned in more than a decade – Cisco Systems, Inc. (NASDAQ:CSCO) is certainly taking its best shot at Microsoft Corporation (NASDAQ:MSFT) by taking a shot at the EU commission itself. That could very well be a dangerous strategy. But it seems to be showing in the early arguments that Cisco lawyers presented Skype, Microsoft Corporation (MSFT), Facebook Inc (FB)to the court Wednesday.

“This was a very serious case and there were many factors to show that there could be serious harm for consumers,” Cisco lawyer Alfonso Lamadrid told the court. “The commission brushed off these concerns. Its assessment was, with all due respect, careless.”

Yee-ouch. We weren’t there, but considering most courts tend to give proper deference to the other branches of government, this approach may not go over well. However, Cisco pressed on with its case, saying that the deal was approved without conditions upon Microsoft Corporation (NASDAQ:MSFT) because regulators believed that the market was growing and that there was sufficient competition in the space, which included mentioning Google Inc (NASDAQ:GOOG) by name.

However, Cisco Systems, Inc. (NASDAQ:CSCO) presented the case that the opposite has happened and will happen, that Microsoft Corporation (NASDAQ:MSFT) and Skype will ultimately control about 80 to 90 percent of the video messaging and conference market thanks to the ubiquitousness of Windows-based PC and laptops in the enterprise. The argument is made that with Microsoft having such a dominant share in the market, there would be no incentive for it to develop interoperability with other platforms.

Do you think that argument flies with the court?

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