Microsoft buys Skype for $8.5 billion

Microsoft con­firmed today that it is spend­ing eight and half bil­lion dol­lars in cash to acquire peer to peer com­mu­ni­ca­tions com­pa­ny Skype, which oper­ates the world’s most pre­em­i­nent VOIP (voice over Inter­net pro­to­col) platform.

The deal, which was first report­ed by the tech press a cou­ple of days ago, is the biggest acqui­si­tion in Microsoft­’s his­to­ry, super­sed­ing its pur­chase of aQuan­tive in 2007.

It also marks the begin­ning of a new chap­ter for Lux­em­bourg-based Skype, which start­ed out in 2003 as its own com­pa­ny, became part of eBay in 2005, and then was spun out of eBay in 2009 with the help of a con­sor­tium of ven­ture cap­i­tal firms, which now stand to prof­it hand­i­ly from the sale to Microsoft.

eBay bought Skype six years ago for an esti­mat­ed $3.1 bil­lion; the com­pa­ny lat­er admit­ted that it had over­paid. Skype was val­ued at $2.75 bil­lion in Novem­ber 2009 when eBay sold most of it to a con­sor­tium led by Sil­ver Lake. Microsoft is now buy­ing Skype for more than twice that sum a year and a half later.

No won­der, then, that many tech pun­dits say Microsoft is overpaying.

Microsoft obvi­ous­ly decid­ed that it did­n’t just want Skype, it need­ed Skype, and, con­se­quent­ly, it would be bet­ter to put up the mon­ey to buy it now instead of wait­ing. CEO Steve Ballmer con­tend­ed that Skype was on the path to an IPO (ini­tial pub­lic offer­ing), and that’s like­ly true. So the acqui­si­tion makes sense in that context.

It is, after all, eas­i­er for a pub­licly-owned cor­po­ra­tion to buy a pri­vate­ly-owned com­pa­ny than anoth­er pub­licly-owned corporation.

Microsoft mem­o­rably tried to buy Yahoo a few years ago. That offer was rebuffed, and Microsoft and Yahoo even­tu­al­ly forged a search and adver­tis­ing part­ner­ship instead.

There’s been spec­u­la­tion that Skype will be no longer sup­port­ed on plat­forms oth­er than Win­dows and Win­dows Phone, but Microsoft says that’s not the case. The com­pa­ny explic­it­ly said in its news release con­firm­ing the acqui­si­tion that it “will con­tin­ue to invest in and sup­port Skype clients on non-Microsoft platforms.”

That sug­gests the Skype client for Mac OS and GNU/Linux dis­tri­b­u­tions will con­tin­ue to be devel­oped and be avail­able for down­load in the years to come. And it makes sense: Microsoft would be fool­ish to not make Skype avail­able for oth­er platforms.

How­ev­er, that com­mit­ment won’t pre­vent Microsoft from inte­grat­ing Skype more tight­ly into its own prod­ucts. And indeed, the com­pa­ny says we can soon expect to see Skype woven into Hot­mail, Out­look, Live Mes­sen­ger, Xbox and Kinect, as well as Win­dows Phone (which has qui­et­ly assim­i­lat­ed Zune).

Face­book and Google were also said to be inter­est­ed in Skype, though Face­book’s inter­est was report­ed­ly not seri­ous. Microsoft is actu­al­ly an investor in Face­book, and Face­book uti­lizes Bing for web search, so the social net­work­ing giant does­n’t have much to wor­ry about. Microsoft rivals Apple and Google are prob­a­bly much more con­cerned about Skype becom­ing a Microsoft subsidiary.

The deal has already been approved by the boards of direc­tors of both com­pa­nies. It is sub­ject to reg­u­la­to­ry approval, but that’s like­ly just a formality.