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Shock threat to shut Skype

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#1 dvb2000


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Posted 31 July 2009 - 06:05


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.

#2 BoredBozirini


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Posted 31 July 2009 - 06:14

Joltid should now sell the communication technology to eBay at a hefty premium, and make even more money.

#3 FloatingFatMan


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Posted 31 July 2009 - 08:27

Sounds to me like Joltid ran a scam there. Under what terms were they able to terminate the licensing agreement? Surely eBay had a contract with them?

#4 WastedJoker


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Posted 31 July 2009 - 08:30


#5 Ace



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Posted 31 July 2009 - 09:18

This is great news! eBay really deserve whatever they get for constantly raising their fees. It's not like they're short of money. :crazy:

#6 +Ryster


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Posted 31 July 2009 - 09:27

This is great news! eBay really deserve whatever they get for constantly raising their fees. It's not like they're short of money. :crazy:

It's not like they're a business out to make money or anything like that. /sarcasm

The only way to tell a company that their prices are too high is to stop buying their products. As long as you continue to pay those high fees, they'll continue charging them.

#7 Prince Charming

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Posted 31 July 2009 - 09:33

That would rather suck. I'm quite fond of Skype.

#8 Ci7


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Posted 31 July 2009 - 09:44

damn it.

guess nomore cheap/free calls to the US/UK :(

#9 Fubar



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Posted 31 July 2009 - 09:48

That would rather suck. I'm quite fond of Skype.

You could always start an Opensource Version of this and have it fully free im sure RMS would love to help out :)

#10 Prince Charming

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Posted 31 July 2009 - 09:51

Well quite, if Skype wasn't closed source, you don't get issues regarding licensing happening. Hopefully if eBay decide to re-release Skype without the licensed part, they decide to open-source Skype to protect it in the future.

#11 Guest_xiphi_*

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Posted 31 July 2009 - 11:00

I just did sign up for Skype this past month. Would hate to see it shut down since I use it for when I don't have a phone near me.

#12 MrChainsaw


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Posted 31 July 2009 - 11:11

We replaced our phone home years ago with Skype, wouldn't like it to shut down...

#13 Glowstick


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Posted 31 July 2009 - 11:16

Why would anyone agree to pay 2.6bn bux and not own all of the code?!

#14 Comic Book Guy

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Posted 31 July 2009 - 11:56

There are two alternatives to Skype, one being Gizmo5, and the other one being VoxOx. To me, VoxOx is the better of the two alternatives, but that is just my opinion.

#15 Futurix



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Posted 31 July 2009 - 12:13

Crickey! Skype shutdown would be a major problem for me and my contacts...