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10/10/2011
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Microsoft's $8.5 Billion Skype Buy Gets EU Nod

VoIP service "not an enterprise product" so competition in the business market for unified communications won't suffer, European regulators say.

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The European Commission has approved Microsoft's plan to acquire Skype, saying it believes the deal would not restrict competition for Internet-based communications products because consumers and businesses have plenty of options to choose from when it comes to VoIP systems.

"The deal would not impede effective competition in the European Economic Area (EEA) or any substantial part of it," the EC said in a statement Friday.

The U.S. Department of Justice approved the proposed $8.5 billion transaction in June, so the EU's sign off means Microsoft has a good chance of meeting its goal of closing the deal by the end of the current calendar year.

Microsoft officials called the EC's approval "an important milestone" on the road to completing the deal.

"We've now received clearance from both the United States and the European Union. We look forward to completing soon the final steps needed to close the acquisition, bringing together the employees of Microsoft and Skype, and creating new opportunities for people to communicate and collaborate around the world," said Microsoft general counsel Brad Smith in a statement.

[ Microsoft is expanding Lync. Learn more: Microsoft Set To Launch Lync Mobile ]

In determining that the buyout would not stifle competition in the market for business VoIP systems, the EC concluded that Skype does not have a significant presence in enterprise communications. "The investigation confirmed that Skype has a limited market presence for these products and does not compete directly with Microsoft's enterprise communication product Lync, which is used by large enterprises," said the Commission.

Microsoft has said it plans to integrate some of the technology behind Skype into Lync so that Lync users will be able to communicate directly with anyone in the Skype network. But the EC, which regulates competition in the European Union, cited Cisco as evidence that, even with Skype in the fold, Microsoft would continue to face healthy competition in the Unified Communications market.

On the consumer side, the Commission said it is unlikely that Microsoft would take steps to discontinue support for Lync on non-Windows platforms like Google Android and Apple's iOS. "Microsoft would not have an incentive to degrade Skype's current interoperability as it is essential for Microsoft that Skype's services are available on as many platforms as possible."

The Commission also said the potential for Microsoft to tightly bundle Skype with the Windows operating system is unlikely to limit Skype access for non-Windows users because the Skype client is freely downloadable. The EC previously slapped Microsoft for bundling Explorer and the Windows Media Player with Windows.

Microsoft shares were up 1.94, to $26.76, in midday trading Monday.

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