Skype founders settle eBay dispute

by Staff, revolutionmagazine.com 06-Nov-09, 15:00

NEW YORK - EBay has finally settled a complex, long-running legal battle with the founders of internet phone service Skype that will open the way for the service to be sold in a deal that values the company at $2.75 billion.

The dispute arose in the wake of eBay's 2005 deal to buy Skype, which was structured so that instead of owning the technology that makes the service work, eBay only licensed it from a company called Joltid - owned by Skype founders Niklas Zennstrom and Janus Friis.

Last year Joltid accused eBay of breaking an agreement and revoked the licence to the Skype technology, putting a dampener on eBay's plans to sell Skype.

Now Zennstrom and Friis will once again own a stake in Skype, making what eBay called 'a significant capital investment in exchange for a 14 per cent stake'. They are also joining investment group Silver Lake, which along with other investors will own a 56 per cent stake in Skype. The remaining 30 per cent continues to be owned by eBay, which will receive around $1.9 billion in cash when the deal is done.

Missing out is Index Ventures, which had been part of the group wanting to buy Skype. Zennstrom and Friis launched legal action against Index and one of its directors, Mike Volpi, earlier this year. Volpi was formerly chief executive of Joost, another company founded by Zennstrom and Friis.

It brings to an end the dispute with Joltid, as all the intellectual property rights revert to Skype.

John Donahoe, president and chief executive of Skype, said: "Skype will be well positioned to move forward under new owners with ownership and control over its core technology. At the same time, eBay continues to retain a significant stake in Skype and will benefit from its continued growth. We look forward to closing the deal and focusing on growing our core e-commerce and payments businesses."