Facebook and Google weigh up Skype offers

Nick Clark
Sunday 23 October 2011 02:09

The internet giants Google and Facebook have held talks about possible tie-ups with Skype, it emerged yesterday, and analysts believe either move would make sense.

Insiders claim that Facebook is considering an outright takeover of the online video chat site, while Google was running the slide rule over a joint venture, according to reports.

This marks the latest twist in the history of the service, which was previously owned by eBay and was preparing to float later this year.

Whit Andrews, an analyst at Gartner, said: "When Skype went on the block it was obvious both Google and Facebook would have been pricing a deal. It would not be a surprise if they have held talks."

Facebook's chief executive, Mark Zuckerberg, has held internal discussions weighing up a bid that could value Skype at up to $4bn (£2.4bn), according to Reuters. Google has also held preliminary talks, though it is targeting a joint venture. All three companies involved refused to comment yesterday.

Mr Andrews said: "If either buys Skype, it would be significant for the sector. Video is becoming more important by the second."

Skype has 663 million registered users, with 145 million of those using it every month. A spokesman said that, as of the end of March, about 30 million users are logged in at any given time. However, a fraction of those are paying for the service. The company has swung from a $352m loss in 2009, to a profit last year, although it was just $20.6m.

Skype already has ongoing dealings with both companies. Its software overhaul last year included integration with Facebook. The new service allowed users to call friends from their newsfeed. It also licenses video technology from a company called On2 to provide high-quality video. On2 was bought by Google in February last year.

"A deal would make great sense to both Facebook and Google for different reasons," Mr Andrews said. "They would also benefit from the other not getting it. There are lots of reasons, but it all comes down to price."

Mr Andrews called it a "unique asset", adding for Facebook it would be about a "growth story". For Google a deal would diversify its operations into the social space, one it has tried desperately to crack, so far unsuccessfully.

This would not be the first major takeover of Skype. In 2005, eBay paid $3.1bn for the group. The deal proved disastrous and the online auction site sold its majority holding in 2009 to a consortium led by the private equity group Silver Lake for $1.9bn.

Skype filed its intention to float in August last year. Yet in January, new chief executive Tony Bates announced that the initial public offering was to be pushed back.

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