eBay Acquires Skype for $2.6 Billion

By Nate Mook | Published September 12, 2005, 12:03 PM

Confirming rumors the two companies were in talks, eBay on Monday announced it would acquire Internet telephony provider Skype for $2.6 billion in cash and stock, with another $1.5 billion contingent on performance. Skype will be used to facilitate communication between eBay's buyers and sellers.

The move marks a major strategy shift for the ten-year-old company and a dramatic departure from past acquisitions. However, with eBay's stock price stagnant for much of the past year, eBay is looking for ways to restart growth as its core business matures.

Skype will also see integration with PayPal, allowing its 54 million users to more easily pay for calls. Skype's reach in 225 countries will additionally help to expand eBay's services in new markets.

"Our vision for Skype has always been to build the world's largest communications business and revolutionize the ease with which people can communicate through the Internet," said Niklas Zennstrom, Skype CEO and co-founder.

"We can't think of any better platform to fulfill this vision to become the voice of the Internet than with eBay and PayPal."

Zennstrom and other Skype co-founder Janus Friis will remain on in their positions. Zennstrom will report to eBay CEO Meg Whitman and join eBay's senior executive team, the companies said.

"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," said Whitman.

The deal is expected to close in the fourth quarter of 2005.

Comments

Nooooo...
IMO eBay owns too much, and Skype just lost its homegrown feel. No doubt it is soon to become solely commercialised. Prepare for the bloat!

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There is now & will further be even more intensely: a synergy:

1. keep in mind that Skype's about to roll out Video over Voip,
2. Ebay owns a piece of Craigslist,
3. and when you add Paypal to the mix, you not only have three entities with huge subscriber databases being combined, but also--
4. the products/services that each brings to the table are needed by the others; and even better still--
5. those products & services can be combned to produce even more brand-spanking new products & services and to enhance all present ones.
6. Our imagination & the sky are the limit as to what can be possible(this is why Ebay overpaid so much) IFFFF done correctly-- but this is the fly in the ointment:
7. Both Ebay & Paypal service & quality leave a lot to be desired-- & are ripe for being stomped into the ground by a decent competitor(s). The $64K question is: can Ebay right course to some/any extent-- like AOL & Yahoo have done-- or will they finish sinking while thrashing Craigslist & Skype along the way?

Stay tuned...my prediction-- Google(& maybe others) will eventually surpass them, and after floundering for some time, they will be acquired by someone else.

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I'm confused. You're saying Google is going to put eBay out of business? Google doesn't have an auctioning service.

Maybe I'm missing something...

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I'm trying to avoid hijacking this into a Google-fanboy post, but--
Yes, i believe that eventually Google will get into everything: isp / telecom / domain hosting / storefronts / auctions / payment systems, etc. Which is why i recommend everyone sink all their savings AND prostitute themselves to raise extra cash-- 4 Google stock: think Warren Buffet's stock in the 5 figures. Of course, potential-wise only, it will likely split a myriad times.

Though whether i'm right/wrong on that is not the point: someone(s) will come along and do better than both Ebay & Paypal.

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I just don't see that. I think eBay is here to stay.

I also don't see Google becoming a isp or telco, or having storefronts. Payment systems, well, rumor has it they're already working on one. And I could see Google eventually hosting domains.

Someone just said they think Google is going to crash and burn in the not-too-distant future. I can't remember if it was Steve Jobs, or Steve Ballmer. I know, I know... big difference. Oh well. I don't think I believed it anyway.

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Google has been snapping up dark fiber like crazy for a long while now--so.........& didn't they acquire some domain host(s)? I forget...

I think what we've seen so far from them is only the tip of the iceberg....

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Here's a story terminalx:

There was once a boy and girl who went up a hill. They called themselves Jack and Jill. They did some stuff and fell down.

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rofl

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I've used paypal since at least 2001 and I have never had any problems with it...I am curious why everyone has a problem with it? I had one item that was not delivered to me and they researched it and I got almost all my money back cept for a $25 fee (which it clearly states when you read the tos) Other then that there has been no problems. What is all the gripping about. tell me a story

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The only problem with paypal is that they tend to have a "hands off" policy when you get ripped off, yet they still collect their fees. Its sort of like a convenience store for people paying for things, and I dont waste money at convenience stores.

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How about SomethingAwful.com's attempt to gather donations for Katrina?

I'm sure you've heard that story.

In case you haven't:

$30,000+ donated by users to a PayPal account set up by SA for Katrina victims. PayPal froze said account without notice.

They could have done some research, they could have gone to the *only* referring donation page to verify credibility.

Instead they lost all credibility to a *lot* of people. All donations had to be refunded to those who donated and none of it went to help with the disaster.

Thanks Paypal.

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:::posted by drumcat:::

"industry leader" Hahahahhaha.

Whatever. Skype is a joke man. Anything from the makers of Kazaa is a joke.

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I would have to disagree.

Skype practically invented VoIP. At the very least, they introduced the practical use of it to the masses.

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Sweeping Generalizations are the wave of the future, man.

Get with it.

Anything by Microsoft is crap/copied.
Anything *nix is too hard.
Anything Kazaa is full of spyware and viruses.
Anything Novell is old and passe.
Anything written/typed is FACT.

I mean, c'mon, dude. it's the 21st Century. "We don't need no steenking truth."

Live the Hype... Be the Hype.

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wtf?

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lol. I can't tell if you disagree with me or ServerMechanic.

Either way, it's funny.

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This whole thing is funny.

It's funny to see people get bent out of shape on a freaking beta review site.

Who cares?

LOL

In the grand scheme of things does Skype/ebay make a bit of difference? Nope. Not one bit.

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That was a joke, SM.

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That's why it was funny!

^_^

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Out of curiosity, I wonder if Niklas would have said that Google was the better platform to become the voice of the Internet if Skype had been brought by Google.

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[sarcasm]
You just know that eBay only bought Skype because they knew that if they didn't, Google would beat them to it, put out a *beta* online-auction with voice-bidding, and crushed them.
[/sarcasm]

What possible use would Google have with Skype when they just launched their own IM with ~ VoIP?

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Improvement on their own model, perhaps?

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Even tough Google is sitting on a pile of cash, they're not STUPID~!!!!!!!!

They will NOT pay BILLIOMS of dollars for rinky-dinky companies with one program/software to their name & tons of negative cash flow-- remember the tech sector crash??????!!!!!

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You're not a coder, are ya?

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How about this is a different revenue source for a stagnant company? It's pretty likely that ebay isn't going to jump in and trash what is the industry leader. Get a grip, fellas.

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eBay used to be great; you didn't need a credit card to sign up back then, they let you use Billpoint instead of Payscam, there weren't so many megastores and crooks, and they didn't charge you ridiculous fees to sell stuff and then on top of that take their "cut" from the final sale. Now they are buying this? What for? I don't even want to think about it. Voice bidding maybe? Meh...

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I hate how everything is becoming so integrated.

I like having a seperate email account from my IM account. I don't want my ebay account to be tied to Skype in any way.

I guess if people want any privacy they are going to have to just use different services.

Google Talk for phone
MSN for IM/
ISP for email
ebay/paypal totally seperate

Integration sucks. It's a privacy timebomb waiting to happen.

Paypal is one of the worst companies anyway in dealing with customers. Ebay made them worse.

Skype is going to be just garbage now.

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Wow. Exactly how does integration affect privacy? If the company already has your info. . .?

Wouldn't giving your info to 4 seperate companies be more infringing on your privacy then giving it only to one?

Make sense, man.

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Not at all.

That way if one company gets breached the people that breached it only get so much info. If you use Google Mail, Google Talk, and Google Adsense, etc etc. then if there is a breach in the system then the people who breached it know 'everything' instead of just a few things.

Google is a privacy timebomb man.

If you don't know how integration affects privacy then you just keep on being integrated :D

I don't need Google knowing what I chat about......what I email to people.....and where I surf.

I don't care if they know one of those three things, but I don't want them knowing all three.

NEVER PUT ALL YOUR EGGS IN ONE BASKET!

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"Google is a privacy timebomb man."

Unfortunately, I think you're right. =((((

I still use their services though because they're so dang convenient.

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This is me laughing my a** off, man.

Your ISP knows all that sh*t. You can sign off now.

Do you do *anything* that would require privacy? If so..you shouldn't be using GMail, MSN, AIM, ICQ... None of that s*** is private.

You want privacy? PGP, RSA encryption, and certificate validation are where you need to be heading.

Anyone who b****es about privacy and continues to use *any* of these services is a frikkin' dumba**. These services are for the faceless masses, not for coporate espionage and the trading of national secrets.

As far as personal info goes? If I don't want google to have my CC#, I don't give it to them. Damn secure, IMO.

Google isn't in the privacy business, nor are they a security firm.

Have they been hacked? No.

Will they be? Probably.

Should you give them your CC#? Hell no.

Can you use their Email? Why the hell not?

So quit expecting them to be a private form of communication, man, that's not who they are aiming their services at, it ain't what they are trying to do.

It's like complaining you aren't getting the same performance in your Civic that you would get in a Maclaren. That's just not what the Civic is for.

Same goes for eBay, MSN, etc... They're vulnerable because of what their purpose serves. you want easy communication, it's gonna be vulnerable.

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As long as you aren't giving them your CC#, Social, DL#, etc... Who cares?

Anyone here really think they care all that much about your pr0n habits? They certainly aren't going to publish your email to the channel 4 news, man.

No worries...

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LOL PC_Tool.

I'm not at all saying use that crap for corporate stuff. I'm saying that I will not put my eggs all in one basket.

Let's all hug.

And then fall down a hill...

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"I'm saying that I will not put my eggs all in one basket."

I'm not trying to change your POV, I'm simply trying to point out the flawed logic.

It's like you seem to think you have this important information you're dealing in that can't be comprimised.

Worry about privacy when it matters.

GMail, MSN, ICQ, Skype...privacy doesn't matter here because it's not a venue for private communication and should *never* be viewed as such.

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"Skype will also see integration with PayPal, allowing its 54 million users to more easily pay for calls."

I can see it now: eBay-regulars' entire PayPal accounts disappearing when their teenage daughters get ahold of Skype.

"It was just so easy. I didn't think I was talking that much..."

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That's an arguement for parental responsibility. Doesn't have a thing to do with Skype/eBay or Paypal.

Kids who's parents let them get away with murder will....

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Actually, it does, since lots of paypal accounts are frozen for no reason...

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What does that have to do with kids draining mommies account by yakking all day?

"for no reason" implies randomness...kids or no kids.

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That wasn't my point. It was just supposed to be a funny hypothetical situation...

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