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eBay wins out with Skype acquisition
$2.6 billion buy "complete by Christmas".
By Peter Judge | Techworld
Published: 14:26 GMT, 12 September 05
Online auction site eBay will pay at least $2.6 billion for Skype, ending months of speculation which has linked the Internet telephony company to potential buyers including Microsoft, Google, and News International.
eBay chief executive Meg Whitman said in a press call that the company will be adding Skype to its e-commerce sites while continuing to develop Skype's standalone market. Both eBay and Skype will benefit from eBay's other subsidiary, PayPal she said.
"With Skype we have the opportunity to add new monetisation," said Whitman. She was particularly keen on the phrase "lead generation" - in which big companies will advertise products like new cars on eBay. Users will click to make free Skype calls to hear more - and the vendor will pay $2 to $12 per lead, she said.
Other opportunities include the ability to directly call other eBay users to discuss details of auction items, a feature that would help build trust and shift bigger value items on the site, like used cars, she said.
Although the deal should be complete by the end of the year, Skype buttons may not appear on eBay so quickly: "We want to be thoughtful," said Whitman, declining to give a timeline. "There are so many synergies we want to lay these out in a systematic way. We will have a three-year integration programme."
eBay also benefits from the fact that Skype has a huge global presence, and is relatively small in the US. "We have a presence in every country except North Korea, and we are the market leader in each," said Skype chief executive Nikas Zennstrom. "Skype is the fastest growing Internet company ever." Skype's presence in Scandinavia, the Far East and Russia could ease eBay's arrival in those places, she said.
Skype will gain the ability to use PayPal to charge for phone calls on its SkypeOut service, and for other services such as SkypeIn, which could boost Skype's growth in telephony.
Skype was founded in 2002 and currently has 54 million members (our Skype client shows three million of them are online). The deal could actually cost eBay more than $4billion, if Skype keeps hitting performance targets.
Nikas Zennstrom and Skype co-founder Janus Friis will remain at Skype, and join the eBay executive team.
Zennstrom responded to criticism of Skype's failure to open up and use the SIP protocol, by saying that Skype's service was designed to work, unlike the Internet phone services of the time, and uses SIP where appropriate, for instance in connections to the switched phone network.
Skype is also open he said, in the sense of having an API to be extended: "We opened up our API last year, so any website can now integrate Skype IM. We are the world's largest open IM platform."
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