Skype Could Face Closure As Founders Battle Ebay Over Licence

Millions of internet users who use the popular VoIP telephone service Skype could be compelled to search for another alternative to make phone calls over the web, after Skype’s parent company eBay admitted that it didn’t own the technology that runs the service, triggering fears of its closure.

The online auctioning giant has been embroiled in a raging legal battle with the original founders of the technology. The company bought the underlying technology for more than £1 billion in the year 2005 from Joltid, a company owned by Skype’s founders, Janus Friis and Niklas Zennstrom.

In a regulatory filing, eBay said that it might replace Skype’s encrypted P2P technology with its own service, if it loses the legal battle against the technology’s original founders.

“Skype has begun to develop alternative software to that licensed through Joltid”, said eBay, “However, such software development may not be successful, may result in loss of functionality or customers even if successful, and will in any event be expensive”.

Joltid alleged eBay for changing a specific code used in the system, which the company said breached the terms and conditions discussed in the agreement between the two parties.

With more than 480 million users and revenues worth $170 million for the last quarter, Skype has emerged as a big earning source for the renowned auctioning house.

Our Comments

Ebay truly got "conned" when purchasing Skype. Not only the auction website had to write off hundreds of millions of dollars worth of investment, they also managed to only get a license rather than the actual product. This was and still is a massive Damocles sword hanging on Skype.

Related Links

Legal dispute threatens eBay's flotation of Skype

(Telegraph)

Intellectual property dispute could close Skype

(V3.co.uk)

Skype Scrambles to Swap Disputed Code

(Business Week)

eBay could ditch uncrackable Skype tech

(The Register)

Skype under threat from eBay licence row

(Guardian)