Skype Founders Reportedly Close to Settlement with eBay

By: Chris Crum - November 2, 2009

Update 3: Skype and eBay may be close to resolving their issues. Om Malik reports:

The ongoing legal scuffle between Skype, a division of eBay, and its founders, Janus Friis and Niklas Zennstrom, may soon see a resolution, according to someone familiar with the situation. The parties are in discussions to resolve the various issues. The talks are described to be at a sensitive stage and can break down without any conclusion.

Update 2: 
At the Summit this week, eBay John Donahoe said that despite lawsuits, the $1.9 Billion deal will still close.

Update: The Skype founders filed another lawsuit today, complicating matters even more. Reuters reports:

The founders of Skype on Friday filed a new lawsuit against Index Ventures and one of its partners, Michelangelo Volpi, accusing him of misappropriating trade secrets to help broker the sale of the Internet phone service owned by eBay Inc.

Original Article: eBay is being sued by the founders of Skype for no less than $75 million per day. Skype founders Janus Friis and Niklas Zennstrom now own a company called Joltid. They have asked for an injunction to stop Skype from using a piece of software it owns in a filing in a US district court in San Francisco, according to Bloomberg.

Joltid alleges that eBay has been showing the source code for the software to third-party developers without their permission. Joltid claims that peer-to-peer technology of the software is being used in Skype, although they demanded to retain the rights to it back when eBay purchased Skype in 2005. Now, they want $75 million for every day the source code continues to be shown.


eBay says the Skype founders’ claims are "without merit," but according to Bloomberg, eBay says it may shut down Skype if the dispute is not resolved, although they claim to be developing an "alternative technology."

The companies that are planning to buy Skype have also been named in the lawsuit.

eBay recently signed a deal to sell most of Skype, while retaining a 35% stake. The deal valued Skype at $2.75 billion. According to the deal, an investor group led by Silver Lake, which also includes Index Ventures, Andreessen Horowitz and the Canada Pension Plan (CPP) Investment Board would control about a 65% stake. eBay is supposed to receive approximately $1.9 billion in cash upon the completion of the sale.

You have to wonder if the acquisition will go through at all after this mess. This was probably a little more than these investors bargained for.

Related Articles:

The eBay-Skype Deal Hits Roadblock

eBay Finds Buyer For Skype

eBay Sells Skype, Which is Worth $2.75 Billion

Chris Crum

About the Author

Chris CrumChris Crum has been a part of the WebProNews team and the iEntry Network of B2B Publications since 2003. Follow Chris on Twitter, on StumbleUpon, on Pinterest and/or on Google: +Chris Crum.

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  • Jason

    It looks like eBay is basically admitting they have messed up. It would make no sense to say the claims are “without merit” but then to say they may shut down Skype. No company, especially one that large will even consider turning off such a service if they know that the claims against them have no merit.

    • Andy

      I don’t think eBay could look to shut down Skype even temporarily and survive the effects of it. Too many businesses are now reliant on Skype for their skype-in number. I would be lost if my number stopped working but maybe its just the persuasion i would need to look up one of their cheaper competitors.

    • Guest

      The point to it is why fight with them? Ebay is a big enough company to know that this can be dragged on for 10 years or more. Rather then argue with them while paying lawyers and court fees defending themselves they shut it down and bring out what they are working on. It’s perfect business sense.

      The whole thing is that they bought the technology (that is just P2P with VOIP which any college kid could make on a weekend.) and then the old Skype guys aren’t making any money anymore so they want a piece of these billions. They bring in this lawsuit and try to get themselves a slice. What happens to them is that no one will work with them ever again. They just tainted themselves and everything they touch. Because naming Ebay is one thing, but trying to get the investors too? Who’d work with these guys in the future? Microsoft probably. *laughs* But other then that don’t expect to see them bring out anything but what they make themselves, and they better not plan on selling it because no one will buy after they go through with this. Bad reputation and all.

      It’s sad.

    • collection agencies

      Either way law suits have gone crazy in this country.

  • Troy


    Dont kill Skype! It has been my main phone line for over a year now. I have turned multiple friends on to it in various countries in the last years. I do hope they can settle this in a civilized manner without hurting the millions of dedicated Skype users around the world.

  • Don

    eBay is probably bluffing when they threaten to shut down Skype. This will certainly reduce the value of the technology in question and the threat may put them in a position of strength when negotiating with Friis and Zennstrom . Unfortunately for eBay stock holders the value of Skype will tank.

    I’m watching with interest to see if eBay can weasel their way out of this one. Shutting down Skype would be a very stupid move. However it won’t be their first or their last.

  • Cheap Charley

    Lawsuits, just like wars, anytime you start one you never know how it is going to finish, differences are best fought in board rooms, rather than in courthouses when everybody loses, except for the lawyers of course.

    Too Bad I Really like Skype for cheap international calls. I sure hope that I can get my credit back if they fold it up, but hey maybe that will be a class action law suit and I can get a gift certificate from Ebay on how to buy and sell on Ebay!

  • 38pages

    I think that eBay has gotten too big for their britches (as my grandmother would say). They need to be taken out completely and make room for new and better technology. They are still operating under a 1997 mentality… They charge enormous fees, change their policies like a shirt and then, on top of all of that, they display ads on their site… as if they were not making enough already!

    Don’t get me started on eBay…

    And I am not just some random user… I’m a partner in a company that sells about 50 – 100 a week on eBay. I would love to see the market place shift.

    • Guest

      I think that eBay has gotten too big for their britches (as my grandmother would say). They need to be taken out completely and make room for new and better technology. They are still operating under a 1997 mentality… They charge enormous fees, change their policies like a shirt and then, on top of all of that, they display ads on their site… as if they were not making enough already!

      Don’t get me started on eBay… I AGREE WITH YOU. THANKS FOR WRITING WHAT I THOUGHT.

  • http://www.glenwoodfin Glen Woodfin

    So, if eBay can’t use use the code that runs Skype, then what did they buy? The database of clients?

  • Roger

    75 mill a day? Ridiculous numbers. That`s gotta be one nice piece of code.

    Agree with the guy above me; law suits HAVE gone grazy in that country. I cant believe common sence have become some kind of second choice when it comes to cases like this.

  • Pixels & Media

    Things aren’t looking good for Skype (or eBay) which is sad because it really makes it easier to stay in touch with folks living overseas. I’ll keep my fingers crossed that this all gets resolved soon!

  • PPC Tips

    If eBay shuts down Skype there is going to be tons of ticked off people. Do they really think those ticked off people are then going to switch to whatever alternative they are coming up with.

  • Guest

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    This has saved my house from bankruptcy and I wanted to share this story so that others with the same plight might do the same thing.You can work from home and make a living it does take a while to get up to $2000 a month. I made about $500 my first month and this is month 3.

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    • Guest

      You’re a spamming hack!

  • website designer essex

    Certainly this is confusing news, surely the source code is ebay’s property and their purchase of skype must have this detailed

  • Goldfinch PCS

    Are there cheaper options than Skype in the UK?

    I am one of those people who would suffer greatly is skype shuts down. I use them for business communications as well and personal. Skype has been gathering pace in the UK I for one have been championing it as i see it as a reasonable alternative to costly phone companies like BT.

    Would I be able to sue, Skype if they decide to shut it down? I would loose touch with customers, loose business and potential business etc.

  • Michael

    It is unlikely bay will shut down Skype. Can you imagine how unpopular that will make eBay?

    • Baconsdozen

      Being unpopular doesn’t seem to worry ebay,in fact they seem to positively thrive on it.

  • Guest

    Are there cheaper options than Skype.. sure, I think that rebtel with the fact that you can call from your cellphone without pin numbers is way more convenient. Not really caught on yet but a great system.

  • Sydney

    This mess of lawsuits takes a genius to figure out, who is suing who and why? Good information though, maybe we an all learn a lesson on how to do business or how not to do business.

  • brian

    I think e-bay would shut it down if the lawsuit has viable cause to it.The source code may not be a primary function in how skype works but if its a source code that allows skype to function better or some sort of streamline process.I can see why Friis and Zenstromm would be pissed. If their agreement says they own that source code they added to skype and e-bay has to show who they show what to. And they show that code or any part of skype functionality without advance notice if they are supposed to.That is opening up a can of worms no one wants to deal with.So if Friis and Zenstomm have a sales contract that the source code is there own creation under the new company and can not be shown at all.Wow e-bay is going to get a kick in rear they didnt expect. It wouldnt be the first time some major company shut something down that everyone loved.So I also wonder if skype will turn into a more social media like Ustream or something where you can do higher end conferences and so on.They havent really done a whole lot of investment into skype. The quality would improve if they would put it on better servers or better action script or something or html. It would be bad to loose skype but I was just thinking maybe this whole thing is a scare tactic to get people nervous then say they had to pay millions for re-placement code and then skype rates go up with out improving the quality of it. Then skype would have the same wonderful stories like e-bay and say were not making enough. Mega corps suck because the people that run them really dont know how.

  • Guest

    If they keep at this for much longer, Google will replace them both. Google Voice for your skype replacement and some kinda G-Bay thing (not Froogle). eBay probably shouldn
    ‘t threaten its users like they are just banking on their free service (even though we are) but treat us more like they care about us. Ofcourse I use Skype…I will also find an alternative if they shut it down.

  • Ryan K

    what I mean by the subject line is this you steal can’t steal something and get away with it and I hope this is a teaches good lesson for people not to steal


    Typical of the silly @$$ Canadian Government to use Canadian Taxpayer (our government pension plan) dollars to over pay top dollar for something they could get for free. I’ve cut the cord with our Saskatchewan Government controlled Crown Corporation long ago with a FREE download of OPEN SOURCE software long ago. With a simple search they could have easily found TrixBox ( Like DUH! Download, install and go! They could have saved 1.9 billion dollars for more worthy investments! Hell, I’ll sell you the system I’m running in my office for cheap, just 750 million would be fine. Make the check payable to: Darcy Moen, Saskatchewan Entrepreneur

    • Mark

      I think you just made your website look foolish by posting such an uneducated comment. You think the government paid $1.7 billion for a Skype software license?

      They are looking at investing money in the company as SHARES in the hopes of making a return on the investment for the tax payer pension plan. Buying a little more than a piece of software. Skype is a company that actually makes profit, and is a smart investment.

      Like DUH!

  • pittsburgh lawyer

    Wow, this is cazyness! I can’t believe how much people are sueing for these days!

    • Guest

      Yet another example of why we need ‘Loser Pays’ litigation reform in this country. If you know you’re gonna get stuck with all the bills, you won’t file frivilous or ridiculous suits. And blood-sucking lawyers won’t take cases they know could result in no-blood-to-suck!

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