By Till Patrik Holterhus, MLE.
On October 7th, 2011 the European Commission cleared Microsoft’s acquisition of Skype, saying that the deal would not significantly impede effective competition in the European Economic Area or any substantial part thereof.
At $ 8.5 Billion it has been the largest acquisition in Microsoft’s history, paying a price that was dramatically higher than the sums paid by previous buyers of Skype (eBay [ in 2005] and Silver Lake [in 2009]).
Microsoft’s business model is primarily focused on the development of computer software (especially operating systems). Skype provides online communication by instant messaging, voice and video chat.
The competitive assessment of the European Commission showed that in the area of consumer communications, the parties' business assets mainly overlap in the field of video communications, where Microsoft is active through its Windows Live Messenger. However – as the European Commission pointed out in its press release (Reference: IP/11/1164)at the end of last week – there are no competition concerns in this growing market as long as numerous players, including Google, are present as well.
In the field of enterprise communications (software mainly to be used on a business level), 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 mostly by large enterprises.
Lastly, conglomerate effects – although Skype and Microsoft are active in neighboring markets – were denied by the European Commission.
The full European Commission’s decision will soon be available here.