Summary:

It looks like Microsoft (NSDQ: MSFT) could be jumping its last major regulatory hurdle in its bid to buy Skype: it is expected to get cleara…

Microsoft and Skype logos
photo: Getty Images / Justin Sullivan

It looks like Microsoft (NSDQ: MSFT) could be jumping its last major regulatory hurdle in its bid to buy Skype: it is expected to get clearance from the European Union’s competition commission, paving the way for the transaction to close by the end of this year. The deal was first announced in May and will see Microsoft paying $8.5 billion for the Internet calling giant.

The story, first reported in the FT, cites unnamed sources that say Joaquin Almunia, the competition commissioner in Brussels, is expected to approve the deal without any remedies, or riders that Microsoft would have to satisfy to prove that it will not be too dominant in the market.

Regulators in the U.S. already approved the deal in June, also without imposing any remedies.

A quick approval in the EU signifies a shift in how Microsoft is viewed by regulators in the region, and perhaps how its dominance (or at least the perception of it) has significantly altered in the new technology landscape.

It was only in 2008 that the EU regulators imposed a record-breaking fine of €899 million ($1.18 billion) on Microsoft, for failure to pay a 2004 penalty of €497 million for antitrust behavior.

At the time, Microsoft had been ordered to make its products more interoperable with those of competitors when it was accused of bundling services like Internet Explorer too closely with its widely-used Windows OS, making it hard for other browsers to get a look in on those users. That fine is still being contested by Microsoft, which presented its most recent appeals in the case back in May.

Ironically, it seems that interoperability is one of the main bones of contention with European companies contesting the deal between Microsoft and Skype. This time around, there are competitors in the area of Internet telephony who are claiming that Skype is too dominant already in the market for these services, does not let them interoperate with its system. Further Microsoft would make it too difficult for Windows users to elect to use other internet telephony services if it bundled Skype into the OS.

Microsoft’s defense has been that Skype is a voluntary service, and it has built up its business by offering the service on multiple platforms — including those powering PCs, Apple’s iOS platform for the iPhone and iPad, and Google’s Android — and will continue to do so. Skype currently has 145 million active monthly users.

Several days ago, the blogger Phil Wolff, on Skype Journal, went through a series of hypothetical remedies that the courts could have required of Microsoft, covering areas like interoperability but also other areas of consumer rights, such as the fact that Skype in its terms of service apparently doesn’t allow users to file class action lawsuits against the company. It also mentions the Skype/Microsoft/Nokia (NYSE: NOK) connection, although Nokia’s diminished power, and the relative paucity of WP7 devices among users, surely make that less of a domination threat.

In any case, the list mostly seems like fairly reasonable run-through of areas where intervention could have been useful, so it will be interesting to see if the regulators pick up on any of them after all.

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