EBay buys Skype for $2.6 billion

13 September 2005 Online auction giant EBay has bought Internet phone service provider Skype Technologies for $2.6 billion in cash and stock, in a surprise acquisition, scooping up the business from under the nose of Rupert Murdoch’s News Corporation.

The deal ends months of speculation over who will acquire the Luxembourg-based company with Yahoo and Google both having expressed interest, in addition to News Corp. One delay has been the difficulty in valuing Skype, which has 54 million users worldwide, but only two million paying for Skype-related services.

Analysts are divided over how eBay will incorporate Skype’s Internet telephony into its auction model and its other shopping websites, which include Shopping.com, Rent.com, Marktplaats.nl and Kijiji.

“Communications is at the heart of ecommerce and community,” said EBay CEO Meg Whitman. “By combining the two leading ecommerce franchises, EBay and PayPal, with the leader in Internet voice communications, we will create an extraordinarily powerful environment for business on the Net.”

However, EBay could have developed its own sophisticated messaging and communications platform, or even bought one, for far less money than it is paying for Skype, suggested Mark Main, a senior analyst at Ovum. “We appreciate that EBay is not just buying Skype’s technology; it’s also acquiring Skype’s user base and its brand. But we question whether even that justifies the $2.6 billion price tag.”

According to EBay, the acquisition will enable the company to pursue new lines of business and to “offer people worldwide new ways to communicate in a global online era”.

With the increasing pervasiveness of broadband, there is a burgeoning movement towards voice over Internet protocol (VoIP) to make voice calls – even among telecoms giants. Last month search service Google introduced software enabling users to make phone calls and send instant messages from their PCs and Microsoft acquired Internet telephony company Teleo.


Avatar photo

Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

Related Topics