Skype As We Know It May Not Exist Much Longer, eBay Says
EBay is working on software to replace the guts of Skype but is worried that it may not succeed, may lose a court battle with Skype's founders over rights to the core technology and may need to do something drastic in the next few years. The company said in a regulatory filing yesterday that if it fails in both the legal and technical avenues it's pursuing then "continued operation of Skype's business as currently conducted would likely not be possible."
Joltid, a company owned by Skype's founders, merely licensed some of the system's core technology to eBay when it sold Skype to the auction giant in 2005. Joltid now says that the license has been revoked and eBay is infringing on its rights by continuing to use the technology. The case is scheduled to go to court in June of 2010 but eBay is trying to replace the technology in the meantime. It may not succeed.
Joseph Galante at Bloomberg News cites Jayanth Angl, an analyst at Info-Tech Research Group, who argues that replacing the technology will not be easy. "It would be quite difficult to replace what they already have as the underlying component to their service," Angl told Bloomberg. "There are a number of barriers to that, not the least of which are legal barriers." The creation of another global P2P VOIP and video network that doesn't infringe on existing patents is no small task.
Skype is one of the shiniest stars in eBay's portfolio of companies and is aimed to spin out as an independent company that can sell its own stock in an IPO sometime soon. That's unlikely to happen until this most important of several lawsuits the company faces is somehow resolved.
This Spring we reported that Skype's founders were also interested in raising enough capital to buy Skype back from eBay. It's been three months since that news was first disclosed and there have been no updates on the effort that we're aware of.
Skype continues to grow very quickly. Now with 480 million users around the world, it is twice the size of Facebook and adding users almost as fast. Skype being gutted would cause substantial disruption to the communication of millions of families around the world.
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omg i hope this piece of news won't affect skype in a fundamental way. people like myself benefit from its service and would hate to see it being made irrelevant because of poor implementation by ebay.
Wouldn't there be another company who could buy Skype, or like the article suggests, the founders of Skype buy it back. The amount of members are huge, the product is great, the buy would be worth it.
Best regards,
Gianluigi Cuccureddu
How can they just revoke a license they sold to them? It doesn't make sense to me.
How can something like Skype just be let die? This is insane.
One concern is this: today I went on eBay and purchased something for the first time in probably six or seven months. For greater than four years, I was an eBay powerseller. As I was buying that thing, it occurred to me that I will never return to eBay, & eBay knows it. When you get in that kind of a bind, you often do drastic things. At the same time, eBay need not sell something back to founders who sold out unless it is in shareholder's best interests. People who sell to venture capitalist to get started should keep in mind that sometimes they love their genius too much to move on, or that it may be the best idea they will ever have. Agree wholeheartedly with wayangtimes about the global disruption any fundamental change could cause. Too, I applaud you, Marshall Kirkpatrick, as fantastic example of someone who kept on task, and reported a conversation-changing story.
Much ado about nothing. The founders/IP owners are just trying to extract more money from eBay, and eBay is bluffing that it would be willing to let Skype die instead. It's all a negotiation game.
eBay, a company that specializes in taking money from people in return for providing a means for them to sell junk to one another, bought Skype, a company that specializes in the highly technical field of global VOIP communication.
Yeah, I'm *shocked* that eBay has no idea how to handle it, or how to deal with losing part of the core technology.
eBay's a joke.
Wow, I honestly didn't know that Ebay owned Skype. I thought that Skype was a stand-alone company. It seems as though the former owners wish that it was still a stand-alone company.
I hope the former owners are able to hash out a deal with Ebay - competitiveness in the marketplace never hurt anyone.
what a weird story. Sounds like ebay is bluffing.
Yawn. Just negotiation tactics.
That's absurd, Skype needs to be here to stay. That is all, not even going to bother saying more.
As shocked as I was about this purchase 4 years ago, I had no clue that Ebay merely licensed crucial underlying technology, and not even perpetually, at that. How many Billions do you need to lose before a mistake goes from SNAFU to FUBAR?
If it's negotiating tactics then Ebay is even dumber than I thought. Any question of this magnitude would shave 100s of millions of dollars off of Skype's value.
But the reality is that Skype could easily migrate away from the JoltId technology and it would likely be better off. VOIP networks are a dime-a-dozen and all have better call quality than Skype. Would be interesting to see Skype checkout SipPhone/Gizmo.
There's pen source competition: http://ekiga.org/
My first thought is that if Skype dies, it'll really suck... and then I realized that we'll all just find some other bit of software to due the video call thing. There will be some disruption, certainly, but after a couple of months I'm sure we'll all have found new tools...
Posted by: peter.a.stinson.myopenid.com
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July 30, 2009 4:43 PM
It sure is nice of eBay to not think about the rights they have to components of software before buying software which requires licensed software.
Great forethought.
I'm guessing we're not going to see eBay issue an IPO for Skype anytime soon then? :)
Suck it Ebay. Your old and nobody likes you.
This sort of thing doesn't happen in the FOSS world. Once something is GPL'd, CeCILL'd, BSDL'd, etc, no one can take it away from us.
Skype client could to use open SIP std for VOIP and back end could be Asterisk. I don't see this as worrying. Skype really needs to open up anyway.
This is not the first time that Zennstrom et al. have shut down a company about a protocol license dispute.
Anybody remember the Morpheus (StreamCast) file sharing network? It was shut down literally overnight when somebody flipped a bit due to an ongoing legal dispute (http://news.cnet.com/2100-1023-851330.html).
I'm not sure what the legal situation was with Morpheus, but in this case eBay paid over 2 billion dollars for Skype, so I think that it is completely immoral to hold them to ransom over the underlying protocol.
I don't think that this will do Zennstrom any favours. Maybe Joost wasn't as successful as they would have hoped?
Dom.
That's bad... I've got 4 skype phones that are in use daily for several hours... I really hope they don't go down and if they change protocol, the version of the client for phones will be updated accordingly.
Why blaming eBay for all this?
This greedy Zennstrom just made a loophole in the contract that eBay perhaps knew about (sure they both have multi-million legal consultancies working with them), but were too lazy to develop Skype anyway. It could have grown into a full-scale social network in all these years that could rival Facebook, instead they're both involved into some legal rattle and the service has to suffer because of that.
I love skype, sound quality is excellent even for slower net connections too.
Thanks
Sankar
good riddance, maybe their users will jump to Google Talk or other standards-based services.
This should serve as a cautionary tale to any company who relies on licensing proprietary technology in spite of emergent open standards.
Because Skype is proprietary, its users (including eBay in this case) are held at ransom to the developers. This is an unusual case, usually it is just the developers, not the company that gets screwed like this. Proprietary software can only leave users divided and helpless in this way.
If Skype were free software, everyone, including eBay would have the freedom to modify it and copy it, and would not be at the whim of third party developers.
For the (POPULATION minus 480M) people who are saying "Uh...what's Skype?"
http://sayitvisually.com/skype
:-)
eBay just wants Skype out of the house and they are haggling with the founders on what it will take to make all parties happy. If eBay indeed wants to take Skype public, why the seemingly negative talk on its unwanted stepchild? For all the resources they put into it, it is strange they do not show more confidence in being able to dispense with the Joltid technology and develop their own before an IPO or going to court in 2010.
In the meantime there is no need for families and users around the world who depend on Skype to fear disruption. New VOIP services that are innovating where eBay hasn't, are lining up to replace Skype.
I have recently found one which extends beyond Skype to allow free global calling from your mobile and frees you from being tied to your headset and PC. It is called Zenring and it provides free international calls for Mobile-2-Mobile, Mobile-2-PC, PC-2-Mobile, and PC-2-PC without the need to buy credits like Skype or other services. Please take a look at http://www.zenring.com
What a shame. It did help me save a lot of money making international calls...
Hope the news won't come true.
It is very informative. Thanks a lot for sharing it.
I've bookmarked your blog. Keep working.
I love using Skype. It is not only used on my PC but also installed on my mobile. What a bad news eBay has brought forwards.
You create a system, cannot see a commercial use for it, so you make it available on license to someone else, who sees the potential develops and applies it and is making it work profitable with great commercial growth prospects.
The creator realises this, so revokes the license, with a view to cashing in on what it failed to see.
And the lawyers get rich!!!
important information. It’s really useful. Thanks
Very nice post with lots of interesting comments
Thank you !
http://www.misstr.com
It sounds like Ebay may have made a vital mistake in licensing the technology rather than buying it outright.
ugh. ebay.
I can't put my finger on it, but as a company, they disgust me. Time to spend more $ on PR.
I really like Skype. Even though it uses closed and proprietary software, it still works for millions of people around the world. The shame of scenarios like this is that eBay seems to always take steps that are against its own customers. No explanation, no public-facing rationale. And it never seems to play nicely with anybody it doesn't own.
No problem, there are many alternatives, including web-based http://www.tokonda.pl
Only loosing skype contacts, can be pain.
I didn't know that Ebay owned Skype. I thought that Skype was a stand-alone company. It seems as though the former owners wish that it was still a stand-alone company.
Im a fan of both Products.
Skype As We Know It May Not Exist Much Longer, eBay Says http://bit.ly/1j0I3x [from http://twitter.com/marshallk/statuses/2934104235]
Posted by: Marshall Kirkpatrick
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August 11, 2009 10:29 AM
Thank you for sharing your article I would always follow.