Shock threat to shut Skype

[dvb2000]

http://www.smh.com.au/technology/biz-tech/...90731-e3qe.html

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.

[BoredBozirini]

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

[FloatingFatMan]

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?

[WastedJoker]

pwned

[Ace]

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:

[+Ryster Subscriber²]

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.

[Prince Charming]

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

[Ci7]

damn it.

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

[Fubar]

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 :)

[Prince Charming]

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.

[Guest xiphi]

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.

[MrChainsaw]

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

[Glowstick]

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

[Comic Book Guy]

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.

[Futurix]

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

[Comic Book Guy]

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

See the post above yours, there are two alternatives, Gizmo5 is more Skype-like, but VoxOx is the new app on the block and gets my vote.

[+Kyle Subscriber¹]

Also, Google Voice....

[Inklin]

They can't just shut down skype, there would be massive outcry on all corners of the globe and I suppose there will be a lot of unhappy companies... I was thinking of changing my phone to 3 UK for the free skype abilities but this has put me off until I know skype is safe!

[Comic Book Guy]

Also, Google Voice....

Google Voice is for phones, and is US only.

[Chicane-UK Veteran]

See the post above yours, there are two alternatives, Gizmo5 is more Skype-like, but VoxOx is the new app on the block and gets my vote.

New offerings are all well and good but there are a LOT of services now dependent on Skype. There are are countless devices made and sold specifically to work with Skype - even the mobile network "3" here in the UK market a phone which is exclusively a Skype mobile phone.

Add into that the companies who depend on Skype for business, and have Skype-in numbers, etc - it does add up to make a headache that a lot of companies who sell products based on Skype and companies / people who use Skype could really do without! :(

It's an unacceptable situation frankly.

[Futurix]

See the post above yours, there are two alternatives, Gizmo5 is more Skype-like, but VoxOx is the new app on the block and gets my vote.

It will take a lot of time for all my contacts (including my non-techy parents) to switch to something else...

And VoxOx is too US-oriented. Not sure about Gizmo5, cannot find anything about UK in numbers on their website.

[Comic Book Guy]

It will take a lot of time for all my contacts (including my non-techy parents) to switch to something else...

And VoxOx is too US-oriented. Not sure about Gizmo5, cannot find anything about UK in numbers on their website.

VoxOx is not US oriented, I am in Canada, signed up no problem, why because it does international.

[BajiRav]

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.

Open source doesn't magically avoid licensing issues.

[Vykranth]

The whole story is probably the tip of the iceberg shadowing some backstage negociations for a renewal of license between Skype and Joltid. EBay is trying to make Joltid the bad guys which cling to their patents and licenses.

A beautiful example of modern greed and gullibility.

[+M2Ys4U Subscriber¹]

New offerings are all well and good but there are a LOT of services now dependent on Skype. There are are countless devices made and sold specifically to work with Skype - even the mobile network "3" here in the UK market a phone which is exclusively a Skype mobile phone.

Add into that the companies who depend on Skype for business, and have Skype-in numbers, etc - it does add up to make a headache that a lot of companies who sell products based on Skype and companies / people who use Skype could really do without! :(

It's an unacceptable situation frankly.

Quite frankly, it's their own fault for depending on a service not under their control. I think a similar thing could happen with Twitter, were it ever to shut down suddenly.

I put the blame for the entire problem, however, squarely on eBay on this one.