Microsoft buys Skype: comparison with eBay deal logic


The big story yesterday was the acquisition of Skype by Microsoft for $8.5 billion. It was only 6 years ago that eBay bought Skype for $ 2.6 billion. I thought it would be interesting to compare and contrast the publicly announced rationales for the deals.

First, here is Microsoft CEO Steve Ballmer yesterday:

“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.”

Back in 2005, Meg Whitman eBay CEO said:

“Communications is at the heart of ecommerce and community. By combining the two leading ecommerce franchises, eBay and PayPal, with the leader in Internet voice communications, we will create an extraordinarily powerful environment for business on the Net.”

Whilst eBay wanted to incorporate Skype into its core offering of online auction and payment platforms, the explicit Microsoft rationale is much more closely aligned to Skype’s existing business model – significantly reducing implementation risk.

Although not part of any official announcement, the six years since the eBay deal has seen the rise not only of Google, but also of social media (Facebook, twitter, et al). More recently open warfare has broken out in the mobile ecosystem with Apple’s iPhone and iPad redefining smartphone and tablet categories, and Google’s Android becoming the mass-market smart-phone platform, eclipsing Nokia’s market position in the prior generation of mobile handsets.

Microsoft’s recent deal with Nokia shows their intent in this arena and commentators have suggested that Skype is just another part of the broader struggle for market position going on between Microsoft, Google and Apple.

About Rob Bratby

Telecommunications, media and technology lawyer advising companies across Europe and Asia
This entry was posted in Broadband, Commercial activity, M&A, Mobile, Telecoms, US and tagged , , , , , , . Bookmark the permalink.

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