Facebook, Google Reportedly Battling for Skype

Facebook and Google have increasingly crossed over into one another's online turf. Now the Internet giants may be waging a new war -- for Skype.

According to an exclusive Reuters report, Facebook and Google are vying to ink a deal with Skype in the wake of the web video -conferencing service's initial public offering delay. The IPO was set for the first half of 2011 but has been pushed back until later in the year.

Reuters sources say Facebook CEO Mark Zuckerberg has been in "internal discussions" about snapping up Skype. Other anonymous sources claim Facebook hopes to form a joint venture with Skype. Google is also reportedly trying to work out terms on a joint venture.

Skype, Google and Facebook couldn't immediately be reached for comment. Skype is owned by an investor group led by Silver Lake and includes eBay, Joltid Limited, Skype founders Niklas Zennström and Janus Friis, the Canada Pension Plan Investment Board, and Andreessen Horowitz.

Price Is an Issue

Skype has a huge global installed base of users and a complete VoIP telephony infrastructure . It could be readily deployed by Facebook or Google, although Google already has most of the same assets, according to Greg Sterling, principal analyst at Sterling Market Intelligence.

"There's an extremely good fit with Facebook, and it could provide assets the company doesn't already have, as well as a couple of potential new revenue streams," Sterling said.

"The issue would be the acquisition price," he added. "But it's not inconceivable that Skype could work with both in a joint-venture capacity. But given the rivalry between Google and Facebook, I would be skeptical that would happen."

Skype's Evolution

All this may seem familiar to Skype, which was founded in 2003. eBay acquired the then-fledgling company in 2005 for a whopping $2.6 billion in cash and eBay stock, plus potential performance-based consideration. The acquisition was supposed to strengthen eBay's global marketplace and payments platform, while opening several new lines of business and creating significant new monetization opportunities for the company.

It didn't work out so well. In April 2009, eBay announced it would spin off the Internet VoIP telephone service and make an initial public offering during the first half of 2010 after deciding Skype had limited synergies with eBay and its PayPal subsidiary. The company spent a year evaluating Skype and its potential within eBay's portfolio before deciding that a spin-off was the best choice.

Skype has evolved since eBay set it free. Skype acquired Qik, a mobile video software firm, and in March launched a new iPhone app called Qik Video Connect. The new app lets people launch video calling, video messaging, and video sharing. In March, Skype also announced the launch of advertising in Skype software. Ads now appear in the home tab of Skype for Windows.

Going back to February, Skype announced a mobile partner program for operators in markets with low 3G broadband penetration and launched a hot-spot partnership program with leading Wi-Fi providers.
 

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