Microsoft taking over Skype while Skype fires executives

Microsoft plans to buy Skype have now been approved by the US Federal Trade Commission which was one of their last hurdles to clear in their bid to finalise the takeover. The deal isn’t fully completed yet as no money has changed hands but its now pretty much a done deal.

Now we try not to be too biased here at eTeknix but I don’t exactly expect this to be a good thing. Especially with the news that several of Skype’s executives have been fired or at least have left the company it leads us to wonder whether it will be going down the drain as so to speak.

Skype had this to say: “Skype, like any other pragmatic organization, constantly assesses its team structure to deliver its users the best products. As part of a recent internal shift Skype has made some management changes.” Due to the timings of the FTC approval it is presumed that Skype is removing unnecessary staff overlap.

Whether the executives that have been fired will hold onto any stock options and such get a slice of the forthcoming Microsoft buyout money or whether this was a move to stop these members of staff from getting the payouts at all is an interesting debate. The cost of this deal is reported to be $8 billion although Skype’s owners valued the company at $2.7 billion so Microsoft seems to be paying quite a premium, possibly as a result of a bidding war.

This is supposedly the motivation by Microsoft:

1. Unified Communications (UC) – Microsoft has already got the text-based side of this covered with Exchange, Messenger, etc, but it’s not so strong on voice, and more importantly video. Its biggest UC competitor is Cisco, which is very strong on video conferencing, so this should help.
2. Consumer Internet presence – This would mark merely the latest pile of cash Microsoft has thrown at taking on Google as a consumer Internet player. Products such as Bing, Internet Explorer and Windows Live already go head-to-head with Google, but progress has been slow and expensive. Skype would give Microsoft 663 million registered users.
3. Mobile video calling – Apple has Facetime and Google has Google Talk. The two main competitors to Windows Phone 7 already have established Internet calling and video calling apps for their platforms. The absence of an equivalent service on WP7 would be an Achilles heel.