Ebay announces plans to sell Skype

 

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Posted on 1 Sep 2009 at 14:14

According to the New York Times, Ebay is in talks to sell its Skype subsidiary to a consortium of investors for $2bn (around £1.23bn).

Ebay bought Skype in 2005 for a total of $3.1bn (around £1.9bn), but later wrote down $900m (around £554m) of Skype's value as it became clear there wasn't a good fit with its online auction and payments business. The investment group thought to be behind the latest bid for Skype is Andreessen Horowitz, set up by Netscape co-founder Marc Andreessen. Other partners in this group include London-based Index Ventures, which was an early investor in Skype.

There were rumours earlier this year that Skype was to be spun off as a publicly traded company. Skype's original founders, Niklas Zennstrom and Janus Friis, are also known to be keen to buy back the company they founded, and it's thought they may be involved in the current bid. Meanwhile, they are also involved in a court case in the UK over the rights to the core peer-to-peer technologies in Skype.

Skype, unlike other online voice communications software, is built around a proprietary peer-to-peer protocol called Joltid, which was originally designed for the Kazaa file-sharing program by Zennstrom and Friis. The Skype founders still own the rights to the protocol, which they license to Ebay, but they've recently threatened to revoke the license, which would force Skype's owners to completely re-engineer the software to use a different protocol.

Skype was never a good match for Ebay and its Paypal subsidiary, and many people wonder why the online auction house ever thought it could be. The deal to sell the Skype business but retain the rights to the underlying protocol looks like a smart move by the Skype founders, and adds to the mystery: how did Ebay ever enter into such a bad deal? Whatever the history though, selling Skype ??" currently a profitable business with projected revenues of $600m this year ??" seems like a good move.

Author: Barry de la Rosa