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Licensing Dispute Threatens Future of Skype

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  • Wait a minute... (Score:5, Insightful)

    by ustolemyname (1301665) on Friday July 31, 2009 @04:56AM (#28893561)
    eBay paid $2.6 Billion [bbc.co.uk] for a dinky little 8MB program, and don't even bother to make sure they got everything?

    Wow.
    • by Shaiku (1045292) on Friday July 31, 2009 @05:02AM (#28893585)
      I've been wondering for a long time why eBay even bought skype. There is no relationship whatsoever and it doesn't come as a surprise to me that they're recently looking to dump it. They paid an outrageous sum, didn't get full rights, and failed to leverage that technology in any way useful to the company. Bizarre move..
      • by sopssa (1498795) * <sopssa@email.com> on Friday July 31, 2009 @05:11AM (#28893653) Journal

        Because large companies usually try to expand to new areas too. For example see Virgin Group [wikipedia.org] and even Microsoft, who are doing hardware (and xbox) even if their core business is in Operating Systems.

        You dont always need a direct connection between a parent company and the one bought - They can continue to operate like they have, which is even more true when you're buying an existing company.

        • by Anonymous Coward on Friday July 31, 2009 @05:31AM (#28893779)

          Microsoft, who are doing hardware (and xbox) even if their core business is in Operating Systems.

          I thought Microsoft was trying to get out of the Operating System business because they couldn't compete with Windows XP.

        • by iYk6 (1425255) on Friday July 31, 2009 @05:40AM (#28893839)

          There is no reason that a parent company and a bought company have be in related fields. However, it is common that they are. For example, eBay's auction and payment companies. Microsoft's OS and game consoles. Nintendo's game consoles and toys.

          The primary reason is that the parent companies assets, including human, are more aligned to fill the needs of the smaller company. eBay and Paypal was a perfect merge for Paypal, and now they effectively get twice the money per auction after forcing their eBay users to offer Paypal. When Microsoft started making Xboxes, they already had most of the operating system, which is a non-negligible part of a console, and more MS employees would be able to take apart and build a computer than say, the employees of a bank. Nintendo has a name which helps them sell toys.

          Sometimes, the smaller company can fill a need of a larger company. Perhaps an airline company will buy a computer retailer right before a major IT upgrade, and they will effectively have a discount.

          eBay and Skype fulfill none of the examples above and was truly a bizarre move.

        • Re:Wait a minute... (Score:4, Interesting)

          by Ilgaz (86384) on Friday July 31, 2009 @07:02AM (#28894231) Homepage

          eBay buying Skype doesn't make sense. Compare it to Nokia buying Trolltech, maps companies, opening up Symbian with their own money and even starting to enhance their love-hate J2ME virtual machine.

          All makes sense if you think about them, in long term strategy and expanding to new markets and I speak about billions here. Billions spent to make things free and even allowing el cheapo Chinese manufacturers have a real OS on their cell phones and I can easily figure why. On eBay case, I can't.

          If Amazon purchased Skype, it would make absolute sense but not eBay. Amazon had their "expand to new horizons" since the beginning, remember how people laughed at them when they enabled competitors to advertise on their own pages? That was ages ago. Remember S3 first launch?

          • by sopssa (1498795) *

            If Amazon purchased Skype, it would make absolute sense but not eBay. Amazon had their "expand to new horizons" since the beginning, remember how people laughed at them when they enabled competitors to advertise on their own pages? That was ages ago. Remember S3 first launch?

            Companies evolve too. Just because they dont have a history in "expanding to new horizons" doesn't mean they couldn't start doing it now. And it might even be good -- Its a more bad thing to rely entirely on one business.

            Other than seeing Skype as a good business, I dont get why eBay would need an another reason to buy it. It doesn't need to expand eBay's core business. It doesn't need to make their core business easier. It just needs to provide income for the parent company. It also provides better stabili

            • Re: (Score:3, Interesting)

              by Yocto Yotta (840665)
              I'm not a savvy businessman, but I would think that diversifying a business can be too risky if you don't have the free capital to blow. I've personally seen a couple small companies strong core products sunk by risky, expensive, time consuming endeavors in new markets. In Ebay's case, you might argue that they could take the risk because of their size, but in a theoretical world where the economy keeps getting worse instead of rebounding, that $2.5 billion (approx., too lazy to scroll up and fact check) th
        • by mspohr (589790)
          Unfortunately, the track record of big companies expanding into new fields is very poor. One could argue that Microsoft has never been successful in any business where it couldn't leverage its OS monopoly. I think the Skype purchase by eBay was just a bunch of corporate bozos with too much money who thought they were geniuses just because they got lucky once.
      • Re: (Score:3, Interesting)

        by Dan541 (1032000)

        They should open-source skype, then they will at least get lots of good publicity.

      • by turing_m (1030530)

        A fly on the wall at those meetings would have heard at least one person discuss the obvious synergies being leveraged.

      • I heard from "This Week in Tech" podcast that eBay was dreaming the ebay sellers will put "skype me" to their product pages and let the customers (buyers) call them.

        One thing of course, people hates to be called via voice regarding a sell. So, it blew.

    • Re: (Score:3, Interesting)

      by Anonymous Coward

      They got $2.6 Billion for a dinky little 8MB program, and still aren't happy?

    • Re:Wait a minute... (Score:5, Interesting)

      by broken_chaos (1188549) on Friday July 31, 2009 @05:04AM (#28893609)

      They obviously did not think that one through very well. The article reads like they bought everything except the protocol, audio codec, or encryption algorithm (one or more of the three - the article isn't detailed enough to say which) - something which stops any replacement they create from being backwards compatible with any other versions of Skype. From that alone, it gives me the impression this is a patent issue, not a copyright issue. Perhaps we can "con" a large company into not supporting software patents out of this mess? ;-)

      I also wonder what the potential liability here is, given that portions of Skype are a paid service.

      • Re:Wait a minute... (Score:5, Informative)

        by k33l0r (808028) * on Friday July 31, 2009 @05:43AM (#28893855) Homepage Journal

        Looking at the Skype founders' company website [joltid.com], they license three different products/technologies: PeerEnabler, PeerCache, and Global Index.

        In their words:

        • PeerEnabler is "a virtual Content Distribution Network"
        • PeerCache is "a cache product that enabled network operators to optimize peer-to-peer traffic"
        • Global Index is their flagship product and "is the world's most technologically advanced, scalable and field-tested peer-to-peer technology. Global Index creates a self-organizing and self-healing distributed storage, transport and data object management system that does away with the costs of traditional datacenter solutions and enables a range of applications from communications to broadcasting and beyond."

        They also explicitly state that Global Index is used in Skype.

        • Ahh, so it's a piece of the protocol then. Thanks, I didn't think to check if they were licensing it out to other companies.

          Looks like that link's getting /.ed pretty hard right now, but I'll make a wild guess that I was right on this being a patent dispute and not some sort of copyright dispute.

        • Re: (Score:3, Funny)

          by maxwell demon (590494)

          In other words, they sell filesharing software? Quick, anyone tell the RIAA! :-)

    • by moon3 (1530265)
      Big "HAHA" tag missing. Exactly. I mean this is rip-off of the century.
    • Re: (Score:3, Insightful)

      by FudRucker (866063)
      2.6 billion and did not get full ownership? wow what dumbasses runs eBay!!! i have an old stone bridge in NYC i can sell them too
  • It seems to me that it would not be that hard to just replace the code that is a problem

  • by Opportunist (166417) on Friday July 31, 2009 @05:03AM (#28893597)

    1. Provide a good service, a tool, a format.
    2. Make it cheap.
    3. Wait 'til everyone uses it because it was cheap.
    4. Jack up the price.
    5. Profit.

    • 1. Provide a good service, a tool, a format.
      2. Make it cheap.
      3. Wait 'til everyone uses it because it was cheap.
      4. Jack up the price.
      5. Profit.

      eBay paid $2.6B for Skype, so I think the handful of people that created it made a (ridiculous) profit. eBay bought Skype and let the founders keep the rights to part of the software which is amazingly stupid IMHO. TFA doesn't even say why Niklas Zennstrom and Janus Friis revoked the license, but after getting $2.6B they better have a damn good reason. This blog seems to imply the founders want to buy Skype back. [1]

      [1] Preview didn't show the line, so just in case:
      http://www.readwriteweb.com/archives/sk [readwriteweb.com]

      • by linhares (1241614)
        I think it goes more like this:

        1. Provide a good service, a tool, a format.

        2. Make it cheap.

        3. Wait 'til everyone uses it because it was cheap.

        4. MAKE MORE MONEY by destroying value [halfsigma.com]

        5. Jack up the price.

        6. Profit.

        This story to me is so similar to the IBM one. Skype seems to be the reason the iPhone is not in China yet, and that it will have no wifi. Telecoms despise skype. Why do I suddenly visualize this meeting of world telecom hotshots in Davos arranging to get 1B/year to shut down skype???

        Not

    • Does not work in case of skype you always can use google voice talk (which works better btw. skype is inferior) or directly SIP!

      • by gilgongo (57446) on Friday July 31, 2009 @06:13AM (#28893983) Homepage Journal

        Does not work in case of skype you always can use google voice talk (which works better btw. skype is inferior) or directly SIP!

        One of Skype's big advantages is conference calling (and now, desktop sharing as well). I don't think either Google Talk nor any SIP providers I know do that. Ekiga would seem to be the nearest open alternative to Skype. Odd how the "downloads" page on ekiga.org makes no mention of their Windows version, which according to their wiki (where a Win32 download link appears), appears to be released almost in parallel to the Linux versions. Oh well, I'll mail them about that.

    • by asdf7890 (1518587)

      1. Provide a good service, a tool, a format. 2. Make it cheap. 3. Wait 'til everyone uses it because it was cheap. 4. Jack up the price. 5. Profit.

      1. Provide a good service, a tool, a format.
      2. Make it cheap.
      3. Wait 'til everyone uses it because it was cheap.
      4. Sell for an overly inflated price to a big company by convincing them that it might be the next big thing (look at all those users you could exploit!) and that if they don't buy one of their competitors will.
      5. Profit.
      6. Sit back and watch the company that bought the thing struggle to make a return on the investment while you relax and enjoy the benefits of being on the receiving end of th

  • by dynamo (6127) on Friday July 31, 2009 @05:07AM (#28893625) Journal

    Why would the founders of Skype be threatening to revoke the licensing agreement? What is their side?

    And why would eBay pay billions of dollars for something without some guarantee that they'd be able to run it for a while?

    This is like a super-sized version the story about the music industry claiming that it's ridiculous that people would think they could forever listen to their DRM music.

    On an individual level, people allow themselves to be screwed for a few dollars at a time, just to be able to listen to the music but - paying more than 2 billion for most of something without a contract ensuring that it's not a total waste of money? Wow.

    • by qbast (1265706) on Friday July 31, 2009 @05:17AM (#28893701)

      Why would the founders of Skype be threatening to revoke the licensing agreement? What is their side?

      Isn't it obvious? "Gimme more money!"

      And why would eBay pay billions of dollars for something without some guarantee that they'd be able to run it for a while?

      Their lawyers allowed themselves to get suckered? There is lesson to all those FUDing about how using open sourced pieces of software makes company vulnerable to legal problems. Guess what? With closed source the problem is the same, only worse - you don't have several widely used and well understood licenses - every company creates its own and every time you sign one you risk your legal team missing some well-hidden minefield.

      This is like a super-sized version the story about the music industry claiming that it's ridiculous that people would think they could forever listen to their DRM music.

      On an individual level, people allow themselves to be screwed for a few dollars at a time, just to be able to listen to the music but - paying more than 2 billion for most of something without a contract ensuring that it's not a total waste of money? Wow.

      Wow indeed.

    • by Yvanhoe (564877)
      Well, if I were there, I would try to get everything I could, to totally steal money from eBay, give half of what I won to EFF and say "see ? with open standard, and without stupid software patents, this would not have happened".

      Or I could make a discount with the insurance that Skype will become and stay GPLed.

      But more probably they are just fighting to get some money, cashing out legally on human stupidity.
  • by worip (1463581) on Friday July 31, 2009 @05:11AM (#28893657)
    Then chuck out the propriety code and make it work with open standards. Or if that does not exist, create an open standard and do the first reference implementation. I'm assuming e-bay has the right to distribute the executable under the Skype name.
  • Didn't we just have this a few years ago... oh no, that was SCO forgetting to actually buy UNIX from Novell. I wonder how many other companies will turn out not to own the software they think they own?

    • Re: (Score:3, Interesting)

      by siddesu (698447)

      Your story is an exceptionally good analogy, except for the fact that SCO never developed Unix nor had any relationship with IBM, while the software that is the topic of the FTA was developed and sold to eBay by the very same people who are now revoking the license. And it seems eBay admits to those points in a SEC filing. BTW, this is the main point of the story.

      On topic -- can eBay really be that stupid?

      • by linhares (1241614)

        can eBay really be that stupid?

        yes

      • by argent (18001)

        Your story is an exceptionally good analogy, except for the fact that SCO never developed Unix nor had any relationship with IBM

        Where did I mention IBM? Oh, I didn't!

    • Re: (Score:3, Insightful)

      by gilgongo (57446)

      Didn't we just have this a few years ago... oh no, that was SCO forgetting to actually buy UNIX from Novell. I wonder how many other companies will turn out not to own the software they think they own?

      Also, don't forget that RIM were nearly at the point of having to close down Blackberry wireless operations [cnet.com] in the US a couple of years go for very similar reasons.

      • by argent (18001)

        Nah, that was a patent dispute. Those are a dime a dozen. You can't move without tripping over a submarine patent.

        This isn't a company developing software on their own and then discovering some troll has patented something obvious they depend on. This is a company buying a complete product, and forgetting to actually make sure the product they thought they were buying was listed in the contract.

        • by linhares (1241614)

          This isn't a company developing software on their own and then discovering some troll has patented something obvious they depend on. This is a company buying a complete product, and forgetting to actually make sure the product they thought they were buying was listed in the contract.

          "MY FELLOW IBMERs, I present to you the IBM PC, a project executed on record time by relying on partners to develop the irrelevant parts of our product, like the keyboard; the operating system; and the CPU". [APPLAUSE]

  • a nelson moment (Score:5, Insightful)

    by cas2000 (148703) on Friday July 31, 2009 @05:38AM (#28893827)

    "Ha ha"

    proprietary code. what else would you expect?

  • by supersat (639745) on Friday July 31, 2009 @05:39AM (#28893833)

    Remember that before they started Skype, the founders of Skype created KaZaA, notorious for its immense crapfest of malware [wikipedia.org]. I'm not at all surprised that they're trying to screw over eBay now.

    Of course, not that eBay is much better...

  • Ekiga! [ekiga.org]

    (On the GNUphone [today.com].)

  • Oovoo (Score:3, Informative)

    by PhilHibbs (4537) <snarks@gmail.com> on Friday July 31, 2009 @05:46AM (#28893865) Homepage Journal

    I sometimes use Oovoo instead of skype, as it can do 3-way video calling for free, and more-way calls if one of you has a paid account. It's not quite as good as Skype for 2-way calls, but the 3-way video is nice to have.

  • Nice (Score:3, Interesting)

    by should_be_linear (779431) on Friday July 31, 2009 @05:46AM (#28893867)
    On Linux, Skype is buggy as hell. It would be actually good if they go away and someone like Google step in with something functional. They need it anyway for their Chrome OS.
    • Re: (Score:2, Insightful)

      by Anonymous Coward

      On Linux, Skype is buggy as hell. It would be actually good if they go away and someone like Google step in with something functional. They need it anyway for their Chrome OS.

      Crap. Why does it always have to be Google? Google my ass! There are lots of other companies out there or even non-profit oriented projects (think Ekiga or OpenWengo, for instance) that could do the same or _at_least_ near the level of quality as Skype. Posts like these reflect the crack-smoking and stupid mentality of everyone here that Google is the infallible shiny savior of the world. You're forgetting that it is just another profit-driven company.

      • by linhares (1241614)
        Crap. Why does it always have to be Google? Google my ass! There are lots of other companies out there or even non-profit oriented#####THIS MESSAGE HAS BEEN INTERCEPTED AND THE USER HAS BEEN TERMINATED, FOLLOWING PROTOCOL A45F.
  • A few years ago (Score:5, Interesting)

    by Dunbal (464142) on Friday July 31, 2009 @05:53AM (#28893901)

    I used to communicate with my wife when she was out of town on business. The fortune 500 co she worked for had no problem letting her install Skype on her laptop, so it worked for both of us - free computer to computer calls when she was in Turkey, Argentina, Hong Kong, etc. Our biggest problem was the time zone difference.

          Then about a year ago the company's IT department decided that Skype was "bad", and disabled it on all company laptops. My solution? An ubuntu live CD and ekiga. Now we can communicate again when she's away.

  • by timmarhy (659436) on Friday July 31, 2009 @06:21AM (#28894023)
    these guys are shooting the goose that laid the golden egg. ebay will merely strip out the offending code and implement their own solution. maybe a little painful but i can assure you they aren't throwing up their arms and saying this isn't fixable, lets give up on that 2 billion bucks we spent...
    • Re: (Score:3, Informative)

      by TheSunborn (68004)

      Except for the fact, that this would require all their 50 million users to upgrade their Skype software. Because Ebay can't make an compability version of the prodotol due to patents.

      (And many of those skype installs are on mobile phones, where an upgrade may not be that easy for most users).
       

      • by timmarhy (659436)
        so what, no software vendor has ever rolled out a major upgrade before? even given the problems with firmware updates it's not impossible, but i'm telling you it's a fuck load more possible then ebay walking away from a 2 billion dollar investment as the summary implies.
        • by linhares (1241614)
          You're right. ebay is planning to IPO skype [slashdot.org], so it's probably developing an alternative, publicly, to counteract the DRM blackmail.
  • Could this be used for paving the way to the end of free-of-charge services, or to make other such changes to the service?

    If you try to turn a free-of-charge service into a paid service for an existing and established user base, the users will revolt, but if you first threaten that you may have to take away the service altogether and then go "ah, but we just might be able to save it if you start paying us so that we can afford the new licensing costs...", business users might be relieved that they can avoid

  • by schweini (607711) on Friday July 31, 2009 @06:35AM (#28894101)
    On a related note: there used to be this nice open source skype-alternative (using SIP and all that) called openwengo, but i cant find it anymore. the company also offered a flash based SIP client (wengovisio), and a flash-based teleconferencing thing (wengomeetings), but i cant find any of them anymore. quite a pity.

    a little side-rant: the person that designed the SIP protocol in such an incredibly NAT-unfriendly manner should be drawn and quartered. I know there are work-arounds, but i blame this NAT-unfriendliness for the rise of skype, and now we're stuck with that nonstandard closed protocol crap. I think it was the glorious idea of incorporating the IP addresses inside the SIP packets, or something like that. sigh.

    on a related note: whatever happened to Google's open-source VoIP thingy that incorporated with XMPP/Jabber? I think it was called 'Jingle', but I haven't heard a lot about it since then. And what protocol is Google using for their video-chat in gmail?
    • by linhares (1241614)
      Google Talk uses libjingle [wikipedia.org]. From the wikipedia article: "As of March 2008[update], the Jingle standards are marked as being 'proposed', meaning that it has not yet been approved by the XMPP Standards Foundation but is considered for advancement to the next stage of the standards process. In June 2009, on Jingle specifications website is notice: "Implementations are encouraged and the protocol is appropriate for deployment in production systems, but some changes to the protocol are possible before it becomes
    • by TheRaven64 (641858) on Friday July 31, 2009 @07:15AM (#28894293) Journal

      the person that designed the SIP protocol in such an incredibly NAT-unfriendly manner should be drawn and quartered

      SIP was created in 1996. Widespread deployment of NAT didn't begin until several years later. Back then, everyone thought we'd have moved to IPv6 before v4 addresses became sufficiently scarce that NAT looked like a good idea.

      whatever happened to Google's open-source VoIP thingy that incorporated with XMPP/Jabber? I think it was called 'Jingle', but I haven't heard a lot about it since then.

      It's still called Jingle. It's been published as a series of XEPs (XMPP Enhancement Proposals; think XMPP-specific RFCs), and anyone can implement it. It has a number of transports (via proxy, in-band, direct connection, STUN) and can be used to negotiate pretty much any stream connection.

      And what protocol is Google using for their video-chat in gmail?

      Jingle.

    • by Digana (1018720) on Friday July 31, 2009 @09:21AM (#28895105)

      It became qutecom. [qutecom.org]

      The code is sitll there, but the project hasn't seen many updates recently, and development has slowed down to almost nothing. :-(

  • by discordare (713735) on Friday July 31, 2009 @07:30AM (#28894353)
    The original founders sold Skype to eBay for US $2.7 billion. eBay has now written down the value of Skype to US $1.7 billion, and are planning to spin off the company next year. Along come the founders and threaten to cripple Skype. It seems to me that this drives the potential price of Skype much lower than even the $1.7 billion. When the public offering is made, the original founders come in, buy the now really cheap stock, and then somehow change their minds about licensing their technology for Skype. The price goes up up up, and the guys make another couple of billion! Brilliant....
  • No wonder eBay's lawyers couldn't pay attention during the meetings.

  • by CFD339 (795926) <andrewp@@@thenorth...com> on Friday July 31, 2009 @08:10AM (#28894537) Homepage Journal

    I guess they'll have to make a negative outcome rating on the seller, and attempt to get resolution through the.....oh, wait....then skype will just neg them back and we already know how the "resolution" process favors the sellers. I guess eBay is just out of luck. What a shame.

  • by speedtux (1307149) on Friday July 31, 2009 @08:49AM (#28894829)

    This would be a good time for Skype to switch to open source and open protocols. They make their money on providing landline access and voicemail, so why do they even bother making all this proprietary stuff?

  • What? (Score:3, Insightful)

    by C_Kode (102755) on Friday July 31, 2009 @12:18PM (#28897477) Journal

    You pay $2.6 billion for a company and you leave the rug under you so it can be yanked out by the person you paid the $2.6 billion too effectively killing your business? What dumbass agreed to that?!?!

  • Amusing (Score:3, Insightful)

    by RAMMS+EIN (578166) on Friday July 31, 2009 @12:51PM (#28897993) Homepage Journal

    I find this story slightly amusing, in a schadenfreude sort of way. I've always hated Skype for being a proprietary solution to things we already had standards-based solutions for, and getting hugely successful at it.

    To add insult to injury, getting half of the world locked in to a proprietary solution and killing off interoperability has made the Skype folks very, very rich.

    But now one of the entities that contributed towards these assholes getting rich got burnt by them, badly. Hah. I hope they've learned from this and that other people take notice.

  • The reason for Skype (Score:5, Informative)

    by achacha (139424) on Friday July 31, 2009 @06:48PM (#28903325) Homepage

    At the time of the Skype purchase, eBay was desperately trying to break into the China market against TaoBao (or something like that) that was beating them. Meg The CEO, in yet another display of ineptitude, after a long business trip (a.k.a vacation) in China got a hold of a rumor that Chinese auctioneers preferred to talk on the phone rather than email via anonymous email (which is how eBay was able to keep potential gray market auctions low) and that Skype was going to allow the buyer and seller a better route of communication and allow eBay to dominate China. How no major executive foresaw that once the buyer and seller could communicate by Skype then would just close the auction and negotiate offline and avoid seller fees; everyone but the powers that be saw this coming.

    The asking price of 2.8 billion + 2 billion (or something ridiculous like that) if they met some internal goals (it was as insane as it sounds and at the time every blog, publication, news source was laughing outloud). Needless to say Skype missed their goal gloriously, did not get 2 billion and at that time it came out that in yet another stroke of brilliance by Meg the underlying technology was not part of the 2.8 billion. The only people who benefited were the founders of Skype who must still be laughing.

    If I am buying a chat program for 2.8 billion I better be getting everything... anyhow, all this is public knowledge and a sad chronicle of how incompetent CEO can keep making mistake after mistake and be seen as successful because the company was hugely profitable despite their best efforts. For the record I sold my stock in eBay as soon as I read about this mess and it was at 44$usd at the time, it fell to almost 20$usd when Skype was reported as a write-down (a.k.a. complete loss) in the 10Q and never quite recovered.

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