Report: Microsoft close to buying Skype

In what would be its biggest ever acquisition in its 36-year history, Microsoft looks set to take over Skype in a deal that could be worth as much as $8 billion.

A report by the Wall Street Journal, citing “people familiar with the matter,” suggests that a deal with the Luxembourg-based company may be announced as early as Tuesday – although the report also stated that it “could still fall apart.” That may be the hope of skeptical Skype fans who fear such a takeover could result in unwanted changes to the popular Internet phone service.

According to the WSJ, such an acquisition would give Microsoft a weightier online presence, with the Internet seen as a key battleground by chief executive Steve Ballmer. Its efforts to make gains in the search engine market with Bing have resulted in some success, though Google still commands some 65 percent of US searches.

Not seeming to be one for mega-deals, the Seattle-based computer giant paid around $6 billion for online advertising firm aQuantive back in 2007, the WSJ said. To the relief of many Microsoft executives, the company ditched plans of a $48 billion offer for Yahoo almost three years ago. The search engine company is now worth about half that sum.

Skype, founded in 2003, allows users to make voice and video calls online and has more than 600 million registered users. It was bought by eBay back in 2005 for $2.6 billion in cash and stock in the hope that it would be popular with buyers and sellers who would use it to discuss potential transactions. It seemed that eBay members preferred to stick with tried and tested methods such as email, and the take-up of Skype within eBay never really happened. Two years ago, eBay sold a 70 percent stake in Skype to a group of technology investors. It’s these people who will probably be getting little sleep tonight, especially if it’s not quite a done deal with Microsoft.

Only last week there were rumblings of something happening between Skype, Facebook and Google. It wasn’t certain then whether it related to a possible acquisition or a joint venture of some kind. With Microsoft now entering the fray, it seems unlikely that Zuckerberg and his crew will be making any Skype-related announcements in the near future.

In the meantime, we’ll wait and watch to see if Microsoft announces news of its biggest ever deal, and if so, how it plans to make use of the hugely popular VoIP service.

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