EU checks complaints against Microsoft’s acquisition of Skype

microsoft.jpg

The European Commission is determining whether to require the unbundling of the Internet phone service Skype from Microsoft's Windows operating system before authorising the planned merger of the two companies.

In a letter sent last week to the EU authorities, Italian fixed-line and voice over internet protocol (VoIP) telephone provider Messagenet SpA claimed that the merger with Microsoft would increase Skype's dominant position in the markets of Internet-based telephony and video-telephony.

Messagenet asked the Commission to require the unbundling of Skype from Windows to prevent a harmful effect on competition due to the easier access of Microsoft users to Skype, which would affect rival Internet telephone providers.

"Anti-competitive bundling of Skype into the Microsoft Operating system should be prohibited in any case," reads the letter seen by EURACTIV.

Microsoft's $8.5 billion acquisition of Skype, its biggest-ever, would enable the US software company's new Windows Phones to compete directly with Google and Apple smartphones which already feature video chat. 

The deal was approved by US antitrust regulators in June. EU approval is one of the remaining regulatory hurdles before the deal can be finalised.

Messagenet's move mirrors similar actions taken by browsers' producers in 2009 when they successfully requested the unbundling of Microsoft's browser Internet Explorer from Windows (see 'Background'). 

Skype's lack of interoperability 

Messagenet also called on the EU antitrust body to clear the merger only provided Skype makes its phone services interoperable with other Internet phone providers.

"Skype and Microsoft should be obliged to make interopeable their IP-to-IP voice and videotelephony and presence services, by disclosing to competitors the interfaces required for their products to be able to 'talk' with the ubiquitous Skype software, including HD voice functions," reads the letter.

Skype does not allow rival services to connect to its software, making it therefore impossible for users of rival operators to call Skype customers.

The dominant position of Skype in the market of Internet phone calls is already deterring the development of competing services, mainly due to the lack of interoperability, argues the Italian company.

If Skype can add to its large users' community Microsoft's colossal customer base, there will be a further unfair advantage for Skype. "The first effects of the proposed merger will be an even more rigid approach to interoperability of Skype services so to exclude competitors from the market," reads the letter.

More woes on the horizon

A second letter with critical observations similar to those expressed by Messagenet, was filed by an industry association representing telecommunications companies. And other similar complaints have likely been received by the Commission, sources said.

The complaints were sent to the European Commission as observations to the consultation process opened by Brussels ahead of its decision on the merger between Microsoft and Skype which is scheduled by 7 October.

"As in any merger case, we are studying the observations received by third parties," EU antitrust spokesperson Amelia Torres said without giving details on the outcome of the analysis. 

 

This is not the first time Microsoft has been sued on competition grounds. In January 2009, popular browsers such as Google Chrome, Mozilla and Opera complained to the European Commission that bundling Internet Explorer with Windows would afford Microsoft a 90% share of the browser market on PCs worldwide. The rival browsers argued they would be unable to match such a distribution advantage. 

In response to the antitrust charge the company decided in June 2009 to ship Windows 7 without Internet Explorer. "Microsoft has apparently decided to supply retail consumers with a version of Windows without a web browser at all," the Commission said in a statement reacting to Microsoft's move. "Rather than more choice, Microsoft seems to have chosen to provide less". 

Later in October, the Redmond giant further bowed to the Commission requests and accepted to allow European users of Windows XP, Windows Vista and Windows 7 to choose their favourite browser among a list of twelve. As part of the installation process of the Microsoft operating system, users are able to choose among Safari, Google, Mozilla Firefox, Internet Explorer or others on a 'choice screen' before starting their new computer. 

Subscribe to our newsletters

Subscribe
Contribute