The U.S. Federal Trade Commission said today that it has approved Microsoft’s $8.5 billion cash takeover of voice and video-over-IP provider Skype. Microsoft officially announced its intent to acquire Skype back on May 10 and, since then, users have been taking to Twitter to blame Microsoft for Skype’s intermittent service. The criticism, at least in that sense, has been a bit preemptive. At least, it seems, until today. Now, with Reuters report that there has been antitrust approval of the deal, users shall soon be able to turn to Microsoft when asking questions of Skype’s sometimes-spotty service.
According to what TechCrunch had been hearing at the time, Microsoft outbid Skype’s next competitor by almost two-to-one — and may even have been bidding against itself. Regardless, the tech giant is placing a serious bet on the European VOIP provider and clearly has its sights set on competing with Google in this area. That notion seemed to be telegraphed when Microsoft paid $8.5 knowing that it’s second closest competitor was Google. What’s more, this is Microsoft’s biggest acquisition to date — and certainly one of the largest (at least in publicity) in the tech industry in recent years.
Now, as for full disclosure, I can’t go a day without using Skype, and I know there are a lot out there who share my addiction. But Skype has never been a particularly profitable business, so the real question for Microsoft is going to be how to make real money off the service. Clearly, a big part of the deal is that Microsoft is paying for Skype’s some 700 million users as part of a push to get more users to Windows and Office.
Microsoft has said that it is going to integrate Skype across the board — Xbox, Outlook, you name it, though the business itself will remain in a separate division under the Microsoft umbrella. In practice, though, it’s a big win for Windows users. Though I have to say, it will be strange saying “Microsoft Skype”. If I say it at all.
Update: Just to clarify, as there’s been some confusion, the FTC approved Microsoft’s acquisition of Skype, but both the FTC and the Justice Department have to approve the deal. According to Microsoft General Counsel Brad Smith, both have now done so, with the announcement being made through the FTC’s website.
In related news, a slew of Skype executives have been fired or are leaving the company ahead of the deal.
Skype is a software application that allows users to make voice and video calls and chats over the Internet. Calls to other users within the Skype service are free, while calls to both traditional landline telephones and mobile phones can be made for a fee using a debit-based user account system. Skype was founded by Niklas Zennstrom and Janus Friis who were also the founders of the file sharing application Kazaa. Skype has also become popular for its additional...
Microsoft, founded in 1975 by Bill Gates and Paul Allen, is a veteran software company, best known for its Microsoft Windows operating system and the Microsoft Office suite of productivity software. Starting in 1980 Microsoft formed a partnership with IBM allowing Microsoft to sell its software package with the computers IBM manufactured. Microsoft is widely used by professionals worldwide and largely dominates the American corporate market. Additionally, the company has ventured into hardware with consumer products such as the Zune and...