[real-eyes] Fw: skype might have to be shut down

From: "Reginald George" <sgeorge@xxxxxxxxx>
To: <real-eyes@xxxxxxxxxxxxx>
Date: Tue, 4 Aug 2009 11:16:28 -0500
I don't have the attribution for this story, but I'm sure it will be 
everywhere soon.

July 31, 2009

eBay says it may have to shut down Skype due to a licensing dispute with the 
founders of the internet telephony service.

The surprise admission puts a cloud over the 40 million active daily users 
around the world who use Skype for business or to keep in touch with friends
and far-flung relatives.

A recent study by market researcher TeleGeography found Skype carried about 
8 per cent of all international voice traffic, making it the world's largest
provider of cross-border voice communications.

The online auction powerhouse bought Skype from entrepreneurs Niklas 
Zennstrom and Janus Friis for $US2.6 billion in 2005, but this did not 
include a core
piece of peer-to-peer communications technology that powers the software.

eBay has since been licensing the technology from the founders' new company, 
Joltid, but the pair recently decided to revoke the licensing agreement.

The matter is now the subject of a legal battle in the English High Court of 
Justice, with eBay trying to force Joltid to let it continue using the 
technology.

In a
quarterly report
 filed with the US Securities and Exchange Commission, eBay said in no 
uncertain terms that if it lost the right to use the software it would most 
likely
have to shut Skype down.

eBay said it was working on developing ''alternative software'' to that 
licensed through Joltid, but this ''may not be successful, may result in 
loss of
functionality or customers even if successful, and will in any event be 
expensive''.

''If Skype was to lose the right to use the Joltid software as the result of 
the litigation, and if alternative software was not available, Skype would
be severely and adversely affected and the continued operation of Skype's 
business as currently conducted would likely not be possible,'' eBay wrote.

In the filing eBay also said that, even if it was successful in developing 
alternative software, the technical challenge of assuring backward 
compatibility
with older versions of Skype's technology ''may be difficult to overcome''.

This was echoed by analysts, with the Info-Tech Research Group's Jayanth 
Angl
telling Bloomberg
 that ''it would be quite difficult to replace what they already have as the 
underlying component to their service''.

''There are a number of barriers to that, not the least of which are legal 
barriers," he said.

The case is set to go to trial in June next year, which could seriously 
hinder eBay's plans to spin Skype off as a separate company in a public 
stock offering
next year.

Already, eBay has had to write down Skype on its books to $US1.7 billion, an 
admission that the business is not worth nearly as much as it originally 
paid
for it. However, its revenues for the second quarter grew 25 per cent to 
$US170 million.

But, even though Skype has not been a major financial success, it has 
succeeded in becoming the dominant internet telephony service globally.

Skype has more than 480 million user accounts - almost twice as many as 
Facebook - and the application comes bundled with more than 50 mobile phones 
and
even the Sony PSP.

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[real-eyes] Fw: skype might have to be shut down

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