[Infowarrior] - Shock threat to shut Skype

[Richard Forno]

Shock threat to shut Skype
Asher Moses July 31, 2009 - 1:38PM

http://www.theage.com.au/technology/biz-tech/shock-threat-to-shut-skype-20090731-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.


Source: smh.com.au