Microsoft agrees to buy Skype, while TweetDeck silent

Software giant Microsoft has agreed to acquire web-based telephone service Skype for $8.5 billion (£5.1 billion) - its largest ever purchase - with plans to use the European business's technology in its gaming devices and smartphones.

Microsoft and Skype have entered into a ‘definitive agreement’ that has been accepted by both company boards, and Skype’s backers, private technology investment firm Silver Lake. According to a statement released today, the
will ‘increase the accessibility of real-time video and voice communications’ in Microsoft products.

Skype will become a new business division in Microsoft, and Skype chief executive Tony Bates will assume the title of president of the Microsoft Skype Division, reporting directly to Microsoft CEO Steve Ballmer, the statement says. Skype’s technology will be adapted to support Microsoft devices including gaming consoles Xbox and Kinect, Windows Phone and Windows products.

Founded in 2003, Luxembourg-based Skype last year registered 170 million connected users of its voice-over internet protocol technology, which can be freely downloaded onto computers, mobile phones and other connected devices.

The deal comes despite Skype’s already chequered history with a large American corporation. Auction site eBay acquired the business in September 2005 for $2.6 billion but sold off the loss-making company to Silver Lake in November 2009.
Recent Skype rumours have included that the company has been planning an IPO, while other potential suitors have been named as networking equipment provider Cisco and social networking giant Facebook. Some commentators have described the Microsoft acquisition as a purely ‘tactical deal’ that is less about Microsoft owning Skype technology than about the giant preventing others from owning it.

Ballmer comments, ‘Skype is a phenomenal service that is loved by millions of people around the world. Together we will create the future of real-time communications so people can easily stay connected to family, friends, clients and colleagues anywhere in the world.’

Bates adds, ‘Microsoft and Skype share the vision of bringing software innovation and products to our customers. Together, we will be able to accelerate Skype’s plans to extend our global community and introduce new ways for everyone to communicate and collaborate.’

Meanwhile, TweetDeck founder Iain Dodsworth has remained tight-lipped about a possible sale to social network Twitter.

It has been reported that Twitter is in talks to acquire TweetDeck, the most popular third-party client on the social networking platform, for between $40 million and $50 million (£24 million and £30 million). The rumours come less than four months after unconfirmed reports Bill Gross’s UberMedia bought the business.
In an interview last week during Digital Shoreditch, a festival promoting East London’s internet and technology companies, Dodsworth refused to broach the subject. Instead he explained the inspiration behind the development of the business.

‘It’s been an interesting ride,’ Dodsworth told news agency Reuters. ‘I put out TweetDeck as a product two and a half years ago and it took off from day one and it was never designed as a product for everyone. It was just a product that fixed my problems with Twitter and from there it became very apparent that other people were having the same problems.’

Todd Cardy

Todd Cardy

Todd was Editor of between 2010 and 2011 as well as being responsible for publishing our digital and printed magazines focusing on private equity and venture capital.

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