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EBay to acquire Skype for $2.6 billion

By John Blau , IDG News Service , 09/12/2005
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Online auction site eBay has agreed to acquire Internet telephony company Skype Technologies for $2.6 billion, the companies announced Monday.

The deal will help eBay move into new business areas while allowing Skype to expand the customer base for its VoIP services, the companies said.

For instance, in addition to its current transaction-based fees, eBay could allow deals to be monetized on a pay-per-call basis through Skype. And for its part, Skype could make it much easier for customers to pay for its fee-based services through PayPal, the online payment service owned by eBay.

Skype currently has 54 million members in 225 countries and territories and is adding 150,000 new users each day.

By acquiring Skype, eBay hopes to improve communications between buyers and sellers by allowing them to speak with each other, according to a statement. Buyers will gain an easy and quick way to talk to sellers and receive the information they need to buy items. Sellers, too, will benefit by being able to build relationships with customers and closing deals, it said.

But some analysts warn that real-time communications could hinder rather than enhance online auction sales.

"Language skills could be an issue, especially in Europe." said Ian Fogg, senior analyst at JupiterResearch, a unit of Jupitermedia. "It's one thing to express yourself in a foreign language, say English, via e-mail; but it's something completely different when you're on the phone speaking with someone real-time in a foreign language."

Fogg also questioned whether eBay needs to own a VoIP company to encourage users to use this form of communication, suggesting that a partnership would suffice.

On another front, the Skype acquisition could complicate eBay's plans to expand its business in China - where rival Yahoo recently purchased a 40% stake in online auction site operator Alibaba.com.

China Telecom, one of China's two principal carriers, last week began cracking down on Internet users in southern China who use Skype's SkypeOut service to make international phone calls from their computers. Under existing regulations in China, only licensed carriers are allowed to offer VoIP services that link computers and telephones.

With the acquisition of Skype, eBay will now have to handle this issue and face the political ramifications of a China Telecom crackdown on SkypeOut. "It's going to raise their profile in an unhelpful way," said Duncan Clark, managing director of BDA China, a telecommunications consultancy in Beijing.

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