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Microsoft’s Skype deal gets the go-ahead

AT&T-DirecTV merger closer to reality with DirecTV shareholder approval

Microsoft’s bid for Skype has received the go-ahead from American anti-trust regulators, following an “early termination” of a review into the proposed sale. Under America’s Hart-Scott-Rodinho (HSR) Act, certain types of large mergers and acquisitions deals must be submitted for review by the government.

The Act requires that companies file details of proposed deals with the Federal Trade Commission (FTC) and Department of Justice (DoJ) before being assessed by an anti-trust agency. In cases where the review has been completed and there is no intention to take action to prevent a deal from going ahead, companies can request “early termination”, allowing deals to go ahead without waiting for a statutory period of time to pass.

Microsoft announced its intention to buy Skype for $8.5bn in May this year. The move gives the software giant a greater presence in the unified communications market, as it seeks to roll out VoIP and video calling capabilities; Skype claims 170 million connected users of over 200 billion minutes of voice and video conversation in 2010. The acquisition is the largest in Microsoft’s history and comes at a time when, despite significant marketing initiatives, the company has remained something of a laggard behind rivals Google and Facebook in the online space. Redmond’s Bing search offering accounts for 30 per cent market share in America, compared to Google’s 64 per cent.

A tight integration of Skype’s offerings with Microsoft’s Windows Mobile OS, Xbox and Kinect gaming devices and other communications services should see Redmond taking its game to Apple, which has made significant inroads in the video communications space with its Facetime offering. The acquisition of Skype, coupled with Microsoft’s recent deal with Nokia, could help Redmond further develop relationships with carriers in an effort to play catch-up with Apple and Android.

According to Ovum principal analyst Richard Edwards, Apple Facetime’s availability on Mac, iPhone 4, iPad 2 and iPod touch mean “it is definitely now or never for Microsoft.” Edwards says that while there are other products and companies out there that offer a better fit architecturally than Skype and come with a lower pricetag, “Skype is undoubtedly the product Microsoft needs to stay in the game…It’s popular, it runs on Windows PCs and later this year it will be available on Windows Phone 7.”


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