Skype could go offline as eBay shapes up for legal battle

Natalie Apostolou
10 Aug 2009

Skype could be in jeopardy of being shut down due to a licensing dispute between the popular VoIP operation - now a division of eBay - and founders Niklas Zennstrom and Janus Friis. According to a filing to the US Securities and Exchange Commission, eBay said that the company's founders were planning to pull the license for Skype's core VoIP technology.

In response, eBay is suing Joltid, the Skype founders' British Virgin Islands-domiciled company. The legal battle is set to hit British courts in June next year. The founders clam that eBay is not legally entitled to certain parts of the Skype code under their original transaction.

eBay purchased Skype from the duo in 2005 for $2.6 billion, but there is contention now over how much, if any of the technology was included in the deal.

The legal debacle threatens to derail Skype's proposed $1 billion IPO slated for the second half of 2010. eBay claims that it is looking at developing its own alternative software platform but also indicated that if it lost the legal battle it would probably have to shut down the service, ditching its 40 million active users worldwide. "If Skype was to lose the right to use the Joltid software as the result of the litigation, and if alternative software was not available, Skype would be severely and adversely affected and the continued operation of Skype's business as currently conducted would likely not be possible," it said in the SEC filing.

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