Microsoft Buys Skype for US$8.5 Billion

Added by Gary Dunn on May 13, 2011

In an attempt at creating a stronger presence in an online world dominated by Google and Facebook, Microsoft has announced plans to buy internet phone service Skype for US$8.5 billion (AUS$7.9 billion).

The acquisition is the largest ever by the software giant, and interest has also been expressed by Cisco, Facebook and Google.

Microsoft chief executive, Steve Ballmer, announced the purchase on Tuesday, saying that “Skype is a phenomenal service that is loved by millions of people around the world… Together we will create the future of real-time communications so people can easily stay connected to family, friends, clients and colleagues anywhere in the world.”

Currently tens of millions of people all over the world uses Skype to make low-cost or free internet calls using their computers or smartphones.

The purchase is seen by some as an opportunity for Microsoft to gain momentum in the smartphone market. While Microsoft Windows is dominating computer operating systems, its search engine – Bing – is far behind Google, and its Window Phone mobile platform is also loosing out to Apple’s iPhone, Google’s Android and Research In Motion’s Blackberry.

Skype is said to become a new Microsoft business division -the Microsoft Skype Division – in which Skype CEO Tony Bates will assume the role of president.