Last October, the Federal Trade Commission (FTC) served written notice on Cisco Systems Inc. which stated Cisco was pending investigation by the FTC to determine whether or not the company had attempted to illegally divide the Internet hardware market. Then, at the end of May, the FTC suddenly announced they had dropped the investigation with no further explanation given. \nJohn Chambers\nCEO of Cisco Systems
\r\nBased in San Jose, California, Cisco Systems is one of the first pioneers to manufacture high-end networking equipment, amassing a net worth in excess of $8.5 billion dollars. Highly successful, Cisco holds approximately 85 percent of the world-market for routers, which control the flow of electronic data. Consequently, when Cisco spoke separately with Lucent Technologies Inc. and Nortel Networks in 1997, the FTC became very interested in Cisco's plans.
Originally, Cisco had initiated these meetings with their competitors to explore possible business opportunities together. Because Cisco's technology utilizes 'packet-switching' to transmit data while Lucent and Nortel utilize the less-efficient 'circuit-switching' method, Cisco thought perhaps it might be possible for the companies to work together in some way. The discussions between Cisco and its competitors, however, didn't lead to any business agreements.
"Frankly, after discussions, even really preliminary talks, we realized there was not an opportunity to partner or even work together on small projects," said Cisco's general counsel Dan Scheinman. "We each went our separate ways."
"Once the FTC looked at the facts, they realized there wasn't a whole lot going on," Scheinman said. "There was no settlement or anything like that, no quid pro quo. They just closed the inquiry."
