Marthin De Beer, Cisco's senior VP, video and collaboration group, and the author of the blog post, noted that the company is being joined in the appeal by Messagenet, a European voice over IP service provider.
Cisco isn't seeking to retroactively block the Skype transaction, but it does want restrictions placed on Microsoft's behavior to ensure interoperability with systems from other vendors. Cisco has been making a big play on enterprise video; the decision to oppose the Microsoft/Skype deal as currently configured is a clear sign of how important they view the opportunity - and the risk they see in Microsoft's plan to start spreading Skype functionality into a wide variety of products.
"In the past decade video communications has moved out of the realm of science fiction to become commonplace in our homes, at work, and on mobile devices. Yet we remain some distance from the goal of video calls being as easy and ubiquitous as phone calls are today – across any network and between all devices," the Cisco exec writes in the post. "Imagine how difficult it would be if you were limited to calling people who only use the same carrier or if your phone could only call certain brands and not others. Cisco wants to avoid this future for video communications."
De Beer says Cisco does not oppose completion of the Microsoft/Skype merger, but that the EC should have placed conditions on the deal to ensure interoperability.
"We did not take this action lightly," De Beer writes. "We respect the European Commission, and value Microsoft as a customer, supplier, partner, and competitor. 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. This appeal is about one thing only: securing standards-based interoperability in the video calling space. Our goal is to make video calling as easy and seamless as email is today. Making a video-to-video call should be as easy as dialing a phone number. Today, however, you can’t make seamless video calls from one platform to another, much to the frustration of consumers and business users alike."
"Cisco believes that the right approach for the industry is to rally around open standards," he adds. "We believe standards-based interoperability will accelerate innovation, create economic value, and increase choice for users of video communications, entertainment, and services."
And here's the crux of the issue:
"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," he writes. "At the heart of this opportunity is a question about the model for interoperability. One approach allows each vendor to decide how they will interoperate. Another approach aligns the industry around open standards defined by non-partisan governing bodies. The answer will be critical to whether and how quickly video calls become "the next voice. When vendors implement their own protocols and selectively interoperate, they push the burden of interoperability to the customer. We respectfully request that the General Court act on our concerns and for the European Commission to ensure the proper protections are put in place to encourage innovation and a competitive marketplace."
Update: Sources close to the situation note that Cisco has requested expedited consideration of the appeal; if granted, the process would take about a year. While this is a fairly unusual situation, the sources note that there have been some past examples of deals approved by the EC that were appealed and then remanded for further review by the Commission. The heart of the matter is that Cisco thinks Microsoft should be required to adopt industry standards for enterprise voice and video interoperability, and Microsoft seems to think otherwise. The sources also note that the timing of the filing was tied to the official deadline for seeking an appeal. The sources also notes that Cisco's decision to appeal to the EU in part reflects the fact that there is no provision for such an appeal in the U.S. approval process.
Update 2: Here's Microsoft's statement on the issue. "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.”
Disclosure: My wife is an in-house attorney for Cisco, but has no involvement in this situation.
