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Tuesday May 10, 2011 1:24 pm

Microsoft will acquire Skype for $8.5 billion


microsoft buys skype

Microsoft announced Tuesday that it will acquire VoIP service Skype for $8.5 billion in cash.

Microsoft will purchase the company from investor group Silver Lake, which—along with Index Ventures, Andreessen Horowitz Ventures, and the Canada Pension Plan (CPP)—acquired a majority stake in Skype in December 2009.

Microsoft said the deal will increase the accessibility of real-time video and voice communications across its products, while expanding Skype's reach. Skype will be available on Microsoft products like Xbox, Kinect, and Windows Phone, and Microsoft will connect Skype users with Lync, Outlook, Xbox Live, and more.

Microsoft said it will continue to invest in and support Skype clients on non-Microsoft platforms.


"Skype is a phenomenal service that is loved by millions of people around the world," Microsoft CEO Steve Ballmer said in a statement. "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."

When the deal is complete, Skype will be a new business division within Microsoft. Skype CEO Tony Bates will become president of the Microsoft Skype division, reporting to Ballmer.

"I believe this acquisition is the very best way to extend Skype's reach and will allow us to bring real-time video and voice communications to more people around the world than ever before," Bates said in a blog post. "The combination of Skype and Microsoft will directly benefit all of you who use Skype by ushering in a new era of generative ways for everyone to communicate."

Egon Durban, managing director of Silver Lake, said the group is "thrilled with Skype's transformation during the period of our ownership."

EBay purchased Skype in September 2005 for approximately $2.6 billion, a deal that was completed a month later. The e-commerce site, however, never really managed to maximize its investment in Skype. In April 2009, eBay said it would separate itself from Skype via an initial public offering of Skype shares in 2010. EBay later shrugged off speculation that that IPO was in danger due to Skype's licensing dispute with Swedish company Joltid.

This article, written by Chloe Albanesius, originally appeared on PCMag.com and is republished on Gear Live with the permission of Ziff Davis, Inc.

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