eBay’s Skype Sell-Off

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eBay's Skype saleeBay has sold 65% of Skype, the VoIP system they purchased in 2005. At that time, eBay had been a surprise buyer and outbid both Google and Yahoo by paying $3.1 billion for the service. The deal would have cost a further $1 billion had Skype’s business not stagnated following the takeover.

Skype has over 480 million registered users and an 8% market share of global international call minutes. eBay had planned to increase auction revenues by enabling buyers and sellers to talk with each other. They hoped Skype would help with complex transactions, such as those for cars and high-end goods. However, eBay has recently concluded that the acquisition was ill-judged and a bad strategic fit for their business.

The company planned to float Skype in 2010, but the public offering has become overshadowed by a courtroom battle with the co-founders, Niklas Zennstrom and Janus Friis. eBay may lose the license for some of the peer-to-peer VoIP technology and are developing their own versions of the software.

Potential buyers for Skype included Google, but the 65% stake was finally sold to a consortium led by Silver Lake Partners. The investors include the Canada Pension Plan Investment Board and Andreessen Horowitz, a new venture capital firm led by Netscape founder Marc Andreesen. It has been rumored that the partnership will offer an investment opportunity to Zennstrom and Friis to resolve the legal issues.

Although the negotiations are continuing, Silver Lake is likely to pay around $1.7 billion for their share. This re-values Skype at $2.6 billion or a little over $5 per registered user.

Have you ever used Skype during an eBay transaction? Did you find the service useful? Could eBay make more of Skype’s technology? Was the marriage doomed from the start?

Craig BucklerCraig Buckler
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Craig is a freelance UK web consultant who built his first page for IE2.0 in 1995. Since that time he's been advocating standards, accessibility, and best-practice HTML5 techniques. He's created enterprise specifications, websites and online applications for companies and organisations including the UK Parliament, the European Parliament, the Department of Energy & Climate Change, Microsoft, and more. He's written more than 1,000 articles for SitePoint and you can find him @craigbuckler.

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