Microsoft's deal for Skype gets challenged in Europe by Italian VoIP competitor

Microsoft (Nasdaq: MSFT) has had, for lack of a better word, a dodgy relationship with European regulators who have at times bristled at the brashness--and the overwhelming ubiquity--of the American company.

In 2004, European Union regulators hit the software giant with a record $613 million fine for violating EU antitrust laws. Its competition commission ruled the company hadn't given rivals the information they needed to compete fairly in the server software market; and, they didn't like that Windows came bundled with Windows Media Player, which they ordered the company to stop doing.

Microsoft was hit with another $350 million fine in 2006 for not licensing network communications technology and smacked with another $1.35 billion fine in 2008 when the EU decided it had overcharged developers for access to Windows protocols in defiance of the remedies agreed upon in the earlier case.

Microsoft also was hit with an antitrust suit in 2007, when Opera Software complained to regulators that Microsoft was again being unfair in bundling a browser with its Windows OS. The company in 2009 agreed to ship a version of the operating system, Windows 7E, sans Internet Explorer 8.

Microsoft itself has tried to use the courts to help its business. In 2007, it supported the EU's investigation into Google's (Nasdaq: GOOG) plan to buy DoubleClick.

More recently, in March, Microsoft asked European regulators to look into Google's actions in regards to its handling of online content, accusing the company of engaging in a "broadening pattern of walling off access to content and data that competitors need to provide search results to consumers and to attract advertisers." 

So, it should come as no surprise that Microsoft is facing trouble again in Europe.

This time, it's an Italian company raising a ruckus, taking issue with Microsoft's proposed $8.5 billion purchase of free VoIP provider Skype, saying again that the inclusion of the technology in its Windows OS is unfair. The company, Milan-based Messagenet, also is a VoIP provider and a competitor to Skype; it filed its complaint Sept. 20.

The company, as you'd expect, wants Skype unbundled from Windows. It has also taken the more unusual step of asking regulators to open up Skype's 124 million-strong Internet phone network to competitors' services by having Microsoft publish the Skype's computer coding to allow services to interconnect.

Messagenet contends that the merger will likely make the software even more interoperable than it is today.

"The first effects of the proposed merger will be an even more rigid approach to interoperability of Skype services so to exclude competitors from the market," the company wrote in its filing.

U.S. regulators, citing growing competition to Skype in the form of Google Talk, Apple's (Nasdaq: AAPL) FaceTime and others, have approved the deal, the largest takeover in Microsoft's history. It was widely believed that the EU would approve as well when it made its decision public Oct. 7.

The Messagenet suit may not totally derail the deal, but its approval by Oct. 7 is now far less certain.

"I would certainly say this kind of complaint, if it raises new issues that the commission has not previously considered, may derail the deal or, at least delay approval," one European antitrust lawyer told the New York Times.

So, will the EU approve the merger next month? Let me know what you think.--Jim