Skype Acquisition Tale: Microsoft & Facebook Battle it out

An ideal marriage?

Rumors regarding the “marriage” between two strong players in the social media space, Skype and Facebook, have been doing the rounds for several weeks now. According to sources, Skype was due to sell itself to Facebook for a sum of $4 billion which is almost 4 times the turnover of Skype, approximately $1 billion. While the talks of merger may face a disappointing end, Skype and Facebook have definitely integrated to a certain extent to share mutual values. Where Skype has a Facebook News Feed wall for users to call their Facebook friends, Facebook has a “Skype Me” app that allows similar functionality.

The USP of this integration would mean that it would take Facebook’s communication from “text only” to voice. This would definitely boost Facebook chat and make it more user-friendly. Google Talk will face a huge threat if this merger were to happen as it would take over the entire “communication” domain.

Exit Facebook: Enter Microsoft!

However, according to recent news, Skype has finally been wooed over by a formidable suitor: Microsoft. In its largest ever acquisition till date, Microsoft is set to get hold of Skype for a whopping $8.5 billion. This move by Microsoft is in relation with its attempts to get a slice of the booming consumer internet space. Microsoft’s attempts to gain consumer mindshare with its search engine, Bing, have not achieved the desired results. The acquisition of Skype would definitely give them a huge user base to begin with and increase their chances of being a formidable player in the consumer internet domain.

Show me the Money

In 2005, EBAY had purchased Skype for $2.6 billion but eventually ended up selling almost 70% of the site. While Microsoft is paying way more than what EBAY paid 6 years ago, the merger will end up benefiting all parties involved and reap profits. With Skype reporting losses worth $7 Million in 2010, the merger will provide them with a cash cushion to fall back on and secure their standing in the internet space.

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