Web & communication software

Italian Firm Takes on Skype Deal in a David-Goliath Battle

A complaint by a small Italian firm to the European Commission could derail Microsoft's acquisition of Skype.

Messagenet, based in Milan, has written to the Commission to warn it about the probable antitrust ramifications arising from the merger of Skype and Microsoft. As a result, the Commission may demand the unbundling of Skype from Microsoft's dominant Windows Office suite before approving the proposed deal.

Microsoft's US$8.5 billion acquisition of Skype is its biggest ever and would allow the company's new Windows phones to compete directly with Google and Apple smartphones.

But Messagenet owner Andrea M. Galli, claims the deal would increase Skype's dominant position in the market of Internet-based telephony and video-telephony and fears that "the primary effect of the merger will be to exclude potential competitors from the market." Skype currently has around 124 million regular users. Messagenet, which offers Internet fax, SMS messaging and VoIP services, has around 390,000 registered users.

Besides urging the Commission to make unbundling Skype from Windows a condition of the merger, Messagenet wants the European competition authorities to force Skype to make its phone services interoperable with other Internet phone providers. Galli told the Italian press that he had asked for the coding information required to do so, but that Skype had not responded.

To date the Commission has looked critically at any alleged "tying" of Microsoft products, particularly Windows applications, but would not comment further on this case. Spokeswoman Amelia Torres said, however, that the committee will consider all the letters received in relation to the deal.

The merger is due to go ahead next Wednesday, but the Commission still has the power of veto. The deal was approved by U.S. authorities in June.

Follow Jennifer on Twitter at @BrusselsGeek or email tips and comments to jennifer_baker@idg.com.

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