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Appeal against the acquisition of Skype by Microsoft dismissed

On 07 October 2011 the European Commission (“Commission”) approved the acquisition of Skype Global Sàrl (“Skype”) by Microsoft Corporation (“Microsoft”).

According to the Commission, the transaction would have no effect on matter whether the market for video communication for individuals and for companies is considered to be a common or a separate market for this specific merger. A combined market share of Microsoft and Skype of approximately 80% – 90% on the market for video communications on windows-based computers for individuals would still not be considered as dominant due to the peculiarities of this market. The Commission concluded that this market is characterized by short innovation cycles and the replacement of freeware. If Microsoft would launch such paid-software, PC-users would be more encouraged to seek for other free software as an alternative. Furthermore, it is also important to consider the role of smartphones and tablets in these fast-growing and strongly competitive markets. Microsoft would not have much influence on these markets regarding the operability.

The American company Cisco Systems Inc. (“Cisco”), one of the competitors in the video communications market, and the Italian company Messagenet SpA (“Messagenet”) appealed against that decision. Both claimed, inter alia, that Microsoft would have a preferred interoperability with both, Skype’s database and its software Lync, to the detriment of other competitors. Lync is a software by Microsoft, which focuses on communication for businesses.

Consequently, the Court dismissed the appeal on 11 December 2013 in T-79/12, Cisco Systems Inc. and Messagenet SpA vs. Commission. The Court also stated that the project to connect Lync and Skype would depend on many factors and would not occur in the near future. Furthermore, the exact benefits of such combined software are still unknown. Thus it cannot be even determined if it would cause a significant demand on the market. In addition the Court also stated that Lync faces strong competition. It remarked that one of the main competitors having a larger market share than Microsoft on this market is Cisco. Moreover, the Court confirmed the original decision of the Commission. 

Authors:

Dr. Christina Hummer
Ori Kahn