eBay has confirmed that it may be forced to shut down Skype after a large dispute with its original founders regarding license agreements.
When eBay purchased the VoIP-service in 2005, for $2.6 billion, the agreement did not include a piece of code which is necessary to power Skype and its operations. Because of this, eBay has been forced to license the code from the 2001 company of the founders, Joltid, which claims to be the “leader in peer-to-peer communications.” It is its “peer-to-peer communications” and rights to code that allows Skype to do what it does. Joltid has now told eBay that it is considering ending its licensing agreement, meaning that eBay will no longer have the ability to run Skype. eBay has confirmed that if Joltid does revoke the agreement, then it is quite likely that Skype will have to shut down.
Skype is used by over forty-million users worldwide and is responsible for 8% of vocal communications over the internet. It has been confirmed that Skype is the biggest operator in its field, and recently, the company said that they expect its 2011 revenue to be over $1 billion, but this will clearly not be the case if the license eBay holds to the code for the software is revoked. The possibility of Skype closing has left millions of its users concerned that they will no longer be able to easily and cheaply keep in contact with friends and family who live overseas.
When eBay purchased Skype in 2005, I think that it had a great bargain on its hands. However, I think that it was quite foolish of the company to propose a deal and accept an outcome where it would not own the code that makes Skype work. Without that, Skype is nothing, and if communications and discussions broke down and the founders decided to stop eBay and Skype using this technology, then eBay may have quite frankly wasted that $2.6 billion, as eBay will not have re-generated this amount yet, not to mention the time dedicated to it. The deal, I feel, should have included the right to use the technology without limits and without there ever being a possibility of losing this right.
The matter is now in the hands of the English High Court of Justice, and eBay is demanding that Joltid continue to allow it to use the technology that makes Skype what it is. eBay says it is attempting to develop a piece of technology similar to what it once had rights to use from Joltid, but it claims that it will be very expensive and that it may not present all of the functionality that users once had when Skype was using Joltid’s technology.
Not only that, but eBay is bound to become unpopular with those millions of users that have fallen in love with Skype. I’m sure over the coming weeks there are bound to be a lot of questions for the two companies. The case will go to trial in June 2010, and eBay still says there is a likely chance Skype will close because of the problems that the new technology would pose. I’m wishing that this clearly great piece of technology that is well-loved by millions of people around the world does not come to a sudden standstill, and that those loyal customers are not forced to find a more expensive alternative.
What do you think? Do you use Skype? If so, has this announcement upset you? What will you do if Skype closes? Has Joltid done the right thing? Leave a comment, and let us know your thoughts.