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Skype and eBay, Ready to Make Nice?

By Neetal Parekh on November 05, 2009 | Last updated on March 21, 2019

Skype and eBay have been in a hot mess about Skype's peer-to-peer (P2P) online telephone technology for months now.  Well, they might be close to settlement according to the New York Times and other independent sources.

EBay owns Skype.  But Skype, which founded the unique technology that allows people to carry on phone conversations over the internet, claims that it retained ownership of the software code used for the technology.   

The tale of a sale.

Skype founders Niklas Zennstrom and Janus Friis sold Skype to eBay in 2005.  And just like the "mornings after" with any big purchase, when John Donahue stepped into the role of eBay CEO in 2008 he began to assess and reassess how Skype meshed with eBay as a whole.  EBay ultimately decided to sell the internet phone service, which was the second most profitable business within eBay. It announced plans to hold an initial public offering for Skype, on the basis that the online phone services did not achieve a perfect fit with other eBay businesses.

What was the beef?

It wasn't the sale that put the Skype founders off the hook.  Zennstrom and Friis called foul on eBay claiming the online retailer violated a licensing deal that it made when purchasing Skype.  Lawsuits were filed in London, California, and Delaware.  They threatened to block eBay from selling a majority stake in Skype's web phone service.  And they claimed improper use of confidential information in a bid to acquire 65% stake in Skype.

The potential settlement. 

According to reports regarding the legal settlement, Skype's founders would have more say in new Skype board and the consortium of buyers would be overhauled to give Skype a board seat.  And it is rumored that Index Ventures, a venture capital firm at the center of the legal claims, would step out of the consortium.

In turn, the lawsuits filed reportedly will be dropped.

So, are Skype and eBay ready to settle?

Burying hatchets and breaking bread together may be a little lofty for this formerly-connected pair.  However, the anticipated settlement would put Skype and eBay back in non-hostile communication.  And who knows, once the ink on the settlement dries, they may find some common ground again.

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