eBay admits defeat on Skype integration

Two-and-a-half years after eBay bought Skype, the online auction giant has given up trying to create new, merged capabilities through the acquisition and is letting Skype be what it is.

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Two-and-a-half years after eBay bought Skype, the online auction giant has given up trying to create new, merged capabilities through the acquisition and is letting Skype be what it is.

"There's less focus at eBay today on finding the place where eBay and Skype intersect on the web and mash up to create a new... communication paradigm for eBay, and more focus on Skype growing its business and eBay growing its business," said Jonathan Christensen, Skype's general manager of audio and video, at the Emerging Communications Conference (eComm) in California.

The deal in October 2005 disrupted the pioneering VoIP (Voice over Internet Protocol) software company for a while, Christensen said.

"In some ways, we stalled," he said. "There's almost always a period of integration (when) a lot of weird things are tried, and some work and some don't, and there's defocus."

Along with that, there has been a management shake-up at Skype, he added. Founder Niklas Zennstrom resigned last October, at the same time as eBay slashed the valuation of Skype by half. Josh Silverman, CEO of eBay's Shopping.com unit, became CEO of Skype last month.

Today, however, the relationship between eBay and Skype is going "very well", Christensen said, adding that Skype now has 276 million regular users and is profitable. A "sense of innovation and hard work is very much alive at the company," he said.

The approximately $2.6 billion (£1.3 billion) acquisition of Skype in 2005 raised eyebrows among observers who didn't see a good fit between the two companies. It was not until June 2006 that eBay launched a limited trial of Skype buttons in its marketplace.

The buttons let eBay buyers and sellers launch Skype and talk or text-message before making a purchase. Beginning last October, they became available for sales of all categories of products.

Despite the hiccups of the past, eBay said it still believed Skype was a very valuable asset and was interested in the potential of services such as the SkypeFind business listing feature and SkypePrime advice service.