Article by George Norman

On 09 Nov 2009

I doubt that anyone on this planet has not used or at least heard of popular instant messaging (IM) and Voice over Internet Protocol (VoIP) client Skype. Just in case this exceptional piece of software has eluded you, here is a detailed review. What even some Skype users may not be aware of is the fact that Skype came quite close to its end. Because eBay and Joltid Ltd., the company eBay purchased Skype from for $2.6 billion back in 2005, did not see eye to eye on how to use the Skype code.

eBay wanted to turn Skype into an IPO (a separate publicly traded company), but in order to do so it needs access to all of Skype’s code. Joltid owned part of the code that eBay needed, so eBay decided to sue Joltid. If the lawsuit were to end with a negative result for eBay, the company would have been forced to shut Skype down.


“Although Skype is confident of its legal position, as with any litigation, there is the possibility of an adverse result if the matter is not resolved through negotiation. Skype has begun to develop alternative software to that licensed through Joltid. 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. 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,” explained eBay back in July.

It seems that this code squabbling has come to an end; eBay and Joltid have settled out of court. Here is what the two companies agreed upon:

- Skype now owns all the code previously licensed from Joltid.
- All the litigation between Skype, eBay, Joltid and the investor group led by Silver Lake, which had previously entered into a definitive agreement to acquire a majority stake in Skype, will be dropped.
- Niklas Zennström, founder of Joltid, and Janus Friis, founder of Skype, will join the investor group mentioned above and the Skype board with a 14% share.

Skype President, Josh Silverman, commented: “This is fantastic news for us, clearing the road ahead and making what was shaping up to be an exciting journey, an unbelievable journey.”

“Skype will be well positioned to move forward under new owners with ownership and control over its core technology,” added eBay Inc. President and CEO John Donahoe. “At the same time, eBay continues to retain a significant stake in Skype and will benefit from its continued growth. We look forward to closing the deal and focusing on growing our core ecommerce and payments businesses.”

If you would like to get Skype, a download location is available here.



Tags: Skype, eBay, Joltid, Code

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