Skype Technologies Explained

Skype Technologies S.A.R.L
Type:Subsidiary
Founder:Janus Friis
Niklas Zennström
Area Served:Worldwide
Key People:Deepak Kashyap
Industry:Telecommunications
Products:Videotelephony
Online chat
Business VoIP
Num Employees: 788 (2010)
Subsid:GroupMe
Parent:Microsoft
Location:Luxembourg

Skype Technologies S.A.R.L (also known as Skype Software S.A.R.L, Skype Communications S.A.R.L, Skype Inc., and Skype Limited) is a telecommunications company headquartered in Luxembourg City, Luxembourg, whose chief business is the manufacturing and marketing of the video chat and instant messaging computer software program Skype, and various Internet telephony services associated with it.[1] Microsoft purchased the company in 2011, and it has since then operated as their wholly owned subsidiary;[2] as of 2016, it is operating as part of Microsoft's Office Product Group. The company is a société à responsabilité limitée, or SARL, equivalent to an American limited liability company.

Skype, a voice over IP (VoIP) service, was first released in 2003 as a way to make free computer-to-computer calls, or reduced-rate calls from a computer to telephones. Support for paid services such as calling landline/mobile phones from Skype (formerly called SkypeOut), allowing landlines and mobile phones to call Skype (formerly called SkypeIn and now Skype Number), and voice messaging generates the majority of Skype's revenue.

eBay acquired Skype Technologies S.A. in September 2005 and in April 2009 announced plans to spin it off in a 2010 initial public offering (IPO).[3] In September 2009,[4] Silver Lake, Andreessen Horowitz, and the Canada Pension Plan Investment Board announced the acquisition of 65% of Skype for $1.9 billion from eBay, valuing the business at $2.75 billion. Skype was acquired by Microsoft in May 2011 for $8.5 billion (~$ in).

As of 2010, Skype is available in 27 languages and has 660 million worldwide users, an average of over 100 million active each month,[5] and has faced challenges to its intellectual property amid political concerns by governments wishing to control telecommunications systems within their borders.

History

Two original founders depart, new CEO, and the eBay years

Independence and Silver Lake

Microsoft subsidiary (2011–present)

Palo Alto office

The Skype North American headquarters was opened in early 2013, after the design was completed by San Francisco architect firm Blitz. Located in Palo Alto, California, the space is designed to encourage interaction and spontaneity, while also introducing a sense of humor into the workplace. Fake lawn, cushions that look like boulders, open spaces, and high ceilings accommodate 250 employees in a 5000m2 building. The Palo Alto headquarters also houses a games room complete with a pool table and table football machine. The office's silver LEED Silver certification means that it received between 50 and 59 points for its environmentally friendly construction.[68] [69] [70]

Legal issues

P2P licensing dispute lawsuit and IPO

In its 2008 Annual Report, eBay admitted to an ongoing dispute between it and Joltid Ltd. over the licensing of its peer-to-peer "Global Index" technology in its application.[71] It announced that it terminated a standstill agreement, allowing either company to sue. On 1 April 2009, eBay filed with a UK court to settle the legal dispute. A few days later, eBay announced the planning of a public stock offering in 2010 to spin off Skype as a separate, publicly owned company.[37] Some media outlets characterized the proposed sale and ongoing provision of Skype as being under threat because of the concurrent dispute.[72] [73]

On 1 September 2009, a group of investors led by Silver Lake bought 65% of Skype for $1.91 billion (~$ in).[74] [75] This prompted Joltid to countersue eBay on 17 September 2009.[76]

Both settled the simultaneous suits in November, resulting in Joltid's part-ownership of the newly formed Skype Limited. The final holding share were with Silver Lake reducing their share to 56%, Joltid entered at 14%, and eBay retained 30%.[77]

Other intellectual property challenges

Streamcast lawsuit

StreamCast Networks filed a complaint in U.S. District Court in Los Angeles, alleging theft of its peer-to-peer technology and violation of the "Racketeer Influenced and Corrupt Organizations" statute. The complaint, titled; StreamCast Networks Inc v. Skype Technologies, S.A., was filed on 20 January 2006 in Federal Court in the Central District of California and assigned Case Number, 2:2006cv00391. The $4.1 billion lawsuit did not name Skype's parent company, eBay, when initially filed. Streamcast's lawsuit was subsequently amended on 22 May 2006 to include eBay and 21 other-party defendants.

In its lawsuit, Streamcast sought a worldwide injunction on the sale and marketing of eBay's Skype Internet voice communication products, as well as billions of dollars in unspecified damages. The lawsuit was finally dismissed in a decision filed on 19 January 2007.[78]

IDT lawsuit

On 1 June 2006, Net2Phone (the Internet telephone unit of IDT Corp.) filed a lawsuit against eBay and Skype accusing the unit of infringing, which was granted in 2000.[79] The lawsuit was settled between the parties in 2010.[80]

GPL lawsuit

In July 2007 Skype was found to be guilty by a German court of violating the GNU General Public License in one of its for-sale products, the SMC WSKP100.[81] [82]

Political issues

China 2005

Skype was one of many companies (others include AOL, Microsoft, Yahoo, Cisco) which cooperate with the Chinese government in implementing a system of Internet censorship in mainland China. Critics of such policies argue that it is wrong for companies to profit from censorship and restrictions on freedom of the press and freedom of speech. Human rights advocates such as Human Rights Watch and media groups such as Reporters Without Borders speculate that if companies stopped contributing to the authorities' censorship efforts, the government could be pressured to change.[83]

Niklas Zennström, then chief executive of Skype, told reporters that its joint venture partner in China was operated in compliance with domestic law. "TOM Online had implemented a text filter, which is what everyone else in that market is doing," said Zennström. "Those are the regulations," he said. "I may like or not like the laws and regulations to operate businesses in the UK or Germany or the US, but if I do business there I choose to comply with those laws and regulations. I can try to lobby to change them, but I need to comply with them. China in that way is not different."[84]

France 2005

In September 2005, the French Ministry of Research, acting on advice from the General Secretariat of National Defence, issued an official disapproval of the use of Skype in public research and higher education; some services are interpreting this decision as an outright ban. The exact reasons for the decision were not given.

United States, CALEA 2006

In May 2006, the Federal Communications Commission (FCC) successfully applied the Communications Assistance for Law Enforcement Act to allow wiretapping on digital phone networks. Skype was not compliant with the Act, and stated that it does not plan to comply.[85]

United States, Transparency, and PRISM 2013

Starting in November 2010, Skype has been participating in a U.S. Government spy program titled PRISM, allowing the National Security Agency (NSA) unfettered access to people's chats and video and audio communications. However, it was not until February 2011 that the company was formally served with a directive to comply, signed by the attorney general.[86]

In March 2013, the company issued transparency reports.[87] confirming long held beliefs that Skype responds to requests from governments. Microsoft's General Counsel wrote to the US Attorney General, outlining the company's concerns in July 2013 in a[88] blog from Brad Smith including a copy of the letter to the US attorney.

See also

External links

Notes and References

  1. Web site: About Skype . . 3 October 2014.
  2. News: Microsoft confirms takeover of Skype . . 10 May 2011 . 3 October 2014.
  3. Web site: EBay to buy Skype in $2.6bn deal . . 12 September 2005 . 2 October 2014.
  4. News: Canada Pension plan buys Skype stake | Toronto Star . Thestar.com . 2 September 2009 . 21 August 2014.
  5. News: Profile: How Skype connected . BBC News . 10 May 2011 . 10 May 2011.
  6. Web site: About Skype: What is Skype? . 28 July 2010 . dead . https://web.archive.org/web/20110511000725/http://about.skype.com/ . 11 May 2011.
  7. Web site: Skype is expanding engineering to Prague . Kase . Jaanus . Skype Blogs . 5 December 2006 . dead . https://web.archive.org/web/20061208093554/http://share.skype.com/sites/en/2006/12/skype_is_expanding_engineering.html . 8 December 2006.
  8. Web site: Skype — A Baltic Success Story . credit-suisse.com . 24 February 2008 . dead . https://web.archive.org/web/20070927184732/http://emagazine.credit-suisse.com/app/article/index.cfm?fuseaction=OpenArticle&aoid=163167&coid=7805&lang=EN . 27 September 2007.
  9. Web site: Skype.com WHOIS, DNS, & Domain Info – DomainTools . . 2016-10-30.
  10. Web site: Skype.net WHOIS, DNS, & Domain Info – DomainTools . . 2016-10-30.
  11. Web site: The World's Hottest VC? . dead . https://web.archive.org/web/20080109184710/http://www.eplanetventures.com/en/news/releases/pr_013006_1.html . 9 January 2008.
  12. Web site: Origin of the name/word Skype . 13 August 2010 . https://web.archive.org/web/20051104064354/http://share.skype.com/blog/insight/origin_of_the_name%10word_%22skype%22/ . 4 November 2005.
  13. Web site: China bans Skype . Jack McCarthy . 9 September 2005 . InfoWorld . 7 June 2011.
  14. Web site: eBay Completes Acquisition of Skype . eBay . 17 June 2006 . dead . https://web.archive.org/web/20110818152145/http://investor.ebay.com/ReleaseDetail.cfm?ReleaseID=176402&FYear= . 18 August 2011.
  15. Web site: EBay Buys Skype for $2.6 Billion . PCWorld . 12 September 2005 . 11 May 2011 . dead . https://web.archive.org/web/20111026065245/http://www.pcworld.com/article/122516/ebay_buys_skype_for_26_billion.html . 26 October 2011.
  16. Web site: WSJ: Microsoft to buy Skype for $7bn. Rest of world: for real? . 10 May 2011 . A Microsoft purchase would not be the first time Skype has been bought out; after being started in 2003, it was bought by eBay in 2005 for $3.1 billion. eBay then sold the majority of its stake in 2009 to a private investment group for $1.2 billion less than it paid..
  17. Web site: Skype Launches Next Generation Free Internet and Video Calling for Everyone . Skype . 17 June 2006 . dead . https://web.archive.org/web/20060621212353/http://about.skype.com/2005/12/skype_launches_next_generation.html . 21 June 2006.
  18. Web site: Skype to Announce Disruptive Pricing Strategy for SkypeOut . 19 December 2006 . dead . https://web.archive.org/web/20100805070630/http://about.skype.com/2006/12/skype_to_announce_disruptive_p.html#more . 5 August 2010.
  19. Web site: What is Skype? . Skype.com . 31 March 2009.
  20. Web site: Goodnight Skypecasts — Skype Blogs . Share.skype.com . August 2008 . 31 March 2009 . dead . https://web.archive.org/web/20090202145617/http://share.skype.com/sites/en/2008/08/goodnight_skypecasts.html . 2 February 2009.
  21. News: Error in Skype's Software Shuts Down Phone Service . NY Times . Stone . Brad . 17 August 2007 . 17 August 2007.
  22. News: Skype blames outage on user reboot . The Times . London . Richards . Jonathan . 20 August 2007 . 23 May 2010.
  23. News: Skype faces 020 7870 cut-off . 22 November 2007 . 26 February 2012 . https://web.archive.org/web/20071123143234/https://www.theregister.co.uk/2007/11/22/skype_down_again/ . 23 November 2007.
  24. Web site: ebays-skype-writedown . 2 October 2007 . 2 October 2007 . dead . https://web.archive.org/web/20080108062514/http://corporatetool.blogspot.com/2007/10/ebays-skype-writedown.html . 8 January 2008.
  25. Web site: "Breaching Trust, An analysis of surveillance and security practices on China's TOM-Skype platform", Information Warfare Monitor, 2 October 2008 . 10 October 2010.
  26. Web site: eBay Inc. Appoints New CEOs of Skype and Shopping.com . 25 February 2008 . 25 February 2008.
  27. Web site: Ex-Skype CEO Josh Silverman Joins Greylock as EIR . 7 October 2010 . 7 October 2010.
  28. News: New Skype 4.0 software adds full-screen video calls . Telegraph.co.uk . 6 February 2009 . London . 31 March 2009 . dead . https://web.archive.org/web/20090208135515/http://www.telegraph.co.uk/scienceandtechnology/technology/technologynews/4525013/New-Skype-4.0-software-adds-full-screen-video-calls.html . 8 February 2009.
  29. Web site: Skype for iPhone tops 1M downloads in two days . 3 April 2009 . 3 April 2009.
  30. Web site: Skype Launches on Android Platform and more than 100 Java-Enabled Mobile Phones . 8 January 2009 . 8 January 2009.
  31. News: Skype Targets Businesses to Ring Up New Revenue . The Wall Street Journal . Fowler . Geoffrey A. . 23 March 2009 . 23 March 2009.
  32. Web site: Skype to launch monthly subscriptions and group video chat . 5 May 2010 . 5 May 2010.
  33. News: Skype Gets the Oprah Treatment . 21 May 2009 . The Wall Street Journal . Fowler . Geoffrey A. . 21 May 2009.
  34. Web site: Skype Growing by 380,000 Users a Day . 10 February 2009 . 10 February 2009.
  35. Web site: Skype Hits 521 Million Users And $185 Million In Quarterly Revenue . 21 October 2009 .
  36. Web site: Congratulations Crunchies Winners! . 8 January 2010 . 8 January 2010.
  37. Web site: eBay Inc. Announces press release for Plan for 2010 Initial Public Offering of Skype . 14 April 2009 . dead . https://web.archive.org/web/20090416065725/http://news.ebay.com//releasedetail.cfm?ReleaseID=377199 . 16 April 2009.
  38. Web site: eBay to Acquire Skype press release . 20 June 2008 . dead . https://web.archive.org/web/20061217192249/http://investor.ebay.com/ReleaseDetail.cfm?releaseid=172666 . 17 December 2006.
  39. News: EBay to Unload Skype In IPO, Citing Poor Fit . Fowler . Geoffrey . 6 April 2009 . The Wall Street Journal . 12 January 2010.
  40. Web site: Skype in danger of being shut down . dead . https://archive.today/20120909124816/http://www.neowin.net/news/main/09/08/01/skype-in-danger-of-being-shut-down . 2012-09-09.
  41. News: In a Sale, Skype Wins a Chance to Prosper . The New York Times . Stone . Brad . 2 September 2009 . 11 April 2011.
  42. Web site: Antoine Bertout . Skype.com . Share.skype.com . 11 September 2009 . 10 October 2010 . dead . https://web.archive.org/web/20100405094619/http://share.skype.com/sites/devzone/2009/09/the_future_of_skype_extras.html . 5 April 2010.
  43. Web site: We've settled with Joltid . 6 November 2009 . 14 May 2011 . dead . https://web.archive.org/web/20121118205740/http://blogs.skype.com/en/2009/11/joltid_settlement.html . 18 November 2012.
  44. Web site: eBay Inc. Completes Sale of Skype . dead . https://web.archive.org/web/20110826235646/http://www.ebayinc.com/content/press_release/20091119006361 . 26 August 2011.
  45. News: Horsey . Julian . Skype iPhone App Update: With Multitasking & Drops 3G Fee . Geeky Gadgets . 22 July 2010 . 5 August 2010.
  46. Web site: Get Skype on your TV . 5 January 2010 . 5 January 2010 . dead . https://web.archive.org/web/20100426125812/http://blogs.skype.com/en/2010/01/skype_on_your_tv.html . 26 April 2010.
  47. Web site: Skype is a real live growth company . . 9 August 2010 . 9 August 2010.
  48. Web site: Report Finds Skype Now Accounts for About 25% of International Call Minutes . 6 January 2011 . 6 January 2011 . dead . https://web.archive.org/web/20110109064608/http://www.readwriteweb.com/archives/report_finds_skype_now_accounts_for_about_25_of_in.php . 9 January 2011.
  49. Web site: Preliminary Prospectus dated 9 August 2010 . . U.S. Securities and Exchange Commission . 9 August 2010 . 16 October 2010.
  50. News: Savitz . Eric . Skype Names Cisco Systems Exec Tony Bates As New CEO . Barron's . 4 October 2010 . 16 October 2010.
  51. Web site: Skype gets serious Facebook Integration upcoming IPO . Mashable.com . 14 October 2010 . 14 October 2010.
  52. Web site: Search for Skype Users missing.. – Skype Community . Forum.skype.com . 10 January 2011 . 11 May 2011 . dead . https://web.archive.org/web/20110929020855/http://forum.skype.com/index.php?showtopic=784903 . 29 September 2011.
  53. News: Leena . Rao . Confirmed: Skype Buys Mobile Video Startup Qik . TechCrunch . 6 January 2011 . 5 March 2016.
  54. News: Skype Hires McAffee's Jonathan Chadwick and Silver Lake's Mark Gillett as it approaches IPO . bloomberg.com . 23 March 2011 . Kharif . Olga . 11 October 2011.
  55. Web site: Swisher . Kara . Kara Swisher . Microsoft to Announce Skype Acquisition Early Tomorrow Morning | Kara Swisher | BoomTown | AllThingsD . Kara.allthingsd.com . 11 May 2011.
  56. News: Microsoft confirms $8.5bn Skype deal . The Guardian . 10 May 2011 . London . Halliday . Josh . 10 May 2011.
  57. News: Microsoft Agrees to Buy Skype for $8.5 Billion to Add Web Calls . Bloomberg . 10 May 2011 . Bass . Dina . MacMillan . Douglas . Galante . Joseph . 10 May 2011.
  58. Web site: Skype price raises fears of new tech bubble . . 10 May 2011 . subscription . 10 May 2011 . live . https://ghostarchive.org/archive/20221211231211/https://www.ft.com/content/2e142854-7b2a-11e0-9b06-00144feabdc0#axzz1LtCJH6ph . 11 December 2022.
  59. News: Microsoft confirms takeover of Skype . BBC . 10 May 2011 . 10 May 2011.
  60. Web site: WSJ: Microsoft to buy Skype for $7bn. Rest of world: for real? . ArsTechnica . 10 May 2011 . 10 May 2011.
  61. News: Dolor . Solon . Microsoft Skype Acquisition Expected To Conclude By October, No Rebranding Expected . Social Barrel . 22 July 2011 . 25 July 2011.
  62. Web site: Donovan . Fred . Microsoft Links Lync & Skype . fierceenterprisecommunications.com . 11 December 2012.
  63. Web site: One Microsoft: Company realigns to enable innovation at greater speed, efficiency . .
  64. Web site: Qi Lu, Executive Vice President of Applications and Services Group . . dead . https://web.archive.org/web/20130605115335/http://www.microsoft.com/en-us/news/exec/lu/default.aspx . 5 June 2013.
  65. Web site: Skype traffic continues to thrive . telegeography . 23 February 2019.
  66. News: Internal email: Microsoft forms new 5,000-person AI division; key exec Qi Lu leaving after bike injury . 29 September 2016 . GeekWire . en-US . 2017-05-12.
  67. Web site: Novet . Jordan . 2 July 2023 . The rise and fall of Skype . CNBC . en . 2023-12-21 . live . https://archive.today/20230703214206/https://www.cnbc.com/2023/07/02/the-rise-and-fall-of-skype.html . 2023-07-03.
  68. Web site: Skype office space in Palo Alto . BangkokStartup.com . Andrey Talalaev . 1 June 2013 . 10 January 2014 . dead . https://web.archive.org/web/20130609021514/http://www.bangkokstartup.com/2013/06/01/skype-office-palo-alto/ . 9 June 2013.
  69. Web site: Playful Work Environments . Mashable . Rebecca Hiscott . 10 January 2014 . 10 January 2014.
  70. Web site: Come Picnic on the Fake Lawn at Skype's Palo Alto Offices . Curbed . . Amy Schellenbaum . 12 August 2013 . 10 January 2014.
  71. Web site: ebay 2008 Annual Report . ebay, Inc. . 7 October 2010.
  72. News: Skype under threat from eBay licence row . Arthur . Charles . 1 August 2009 . The Guardian . London . 31 July 2009.
  73. News: Legal dispute threatens eBay's flotation of Skype . Quinn . James . 30 July 2009 . The Telegraph . London . 31 July 2009.
  74. News: 1 September 2009 . Business Wire . eBay Inc. Signs Definitive Agreement to Sell Skype in Deal Valuing Communications Business at $2.75 Billion . 1 September 2009.
  75. Web site: The Social Network That Wasn't: Skype's new owners might make it the platform it always should have been . Gimein . Mark . The Big Money . 1 September 2009 .
  76. News: 17 September 2009 . Wall Street Journal . Skype Founders Balk at eBay Deal . Fowler . Geoffrey A. . 17 July 2010 . live . https://web.archive.org/web/20130521095825/http://online.wsj.com/article/SB125313063626017009.html . 21 May 2013.
  77. News: Skype settles lawsuit with founders . Lindsay . Alan . 6 November 2009 . CompareBusinessProducts . 17 November 2009.
  78. Web site: STREAMCAST NETWORKS, INC., Plaintiff, vs. SKYPE TECHNOLOGIES, S.A., et. al., Defendants . 8 September 2010.
  79. News: Skype Under Attack . McGraw Hill . Business Week . 6 June 2006 . Pallavi Gogoi . dead . https://web.archive.org/web/20060610062414/http://www.businessweek.com/bwdaily/dnflash/jun2006/nf2006066_9375.htm . 10 June 2006.
  80. News: eBay, Skype, IDT, and Net2Phone Settle Lawsuits . 8 September 2010.
  81. Web site: iTWire – Skype cops GPL violation conviction in German court . live . https://web.archive.org/web/20080120200413/http://www.itwire.com/content/view/13690/53/ . 20 January 2008.
  82. Web site: GPL violation by Skype re-affirmed by court . The H Open . 2008 .
  83. Web site: Skype uses peer-pressure defense to explain China text censorship . The Register . 18 June 2006.
  84. News: Skype says texts are censored by China . Financial Times . FT.com . 18 April 2006 . subscription . 19 September 2007 . live . https://ghostarchive.org/archive/20221211231227/https://www.ft.com/content/875630d4-cef9-11da-925d-0000779e2340 . 11 December 2022.
  85. Web site: Can Skype Keep Its Secrets? . dead . https://web.archive.org/web/20070504020521/http://www.voip-news.com/news/features/skype-calea-compliance-061206/ . 4 May 2007.
  86. Web site: How Microsoft handed the NSA access to encrypted messages . World news . 12 July 2013 . The Guardian . 4 September 2013.
  87. Web site: Microsoft 2012 Law Enforcement Requests Report . .
  88. Web site: Blog from Brad Smith including a copy of the letter to the US attorney . 29 May 2020 .