Microsoft puts $8.5bn on Skype to keep Google at bay

The pair said they have entered into "a definitive agreement", pursuant to this agreement which Microsoft will acquire the VoIP (Voice over Internet Protocol) telephony company from its investor group owners, led by Silver Lake.

The acquisition will increase the accessibility of real-time video and voice comms to enterprise users and consumers, the companies said, adding that it will extend Skype's brand and the reach of its platform, during enhancing Microsoft's existing portfolio of real-time comms products and services, just as Windows Live Messenger and Lync.

Skype will support Microsoft's products including Xbox and Kinect, and Windows Phone, according to the pair, and Microsoft will connect Skype users with its Lync, Outlook, Xbox Live and other communities. Redmond will continue to "invest in and support" Skype customers on non-Microsoft platforms, they added.

It's not the first time Skype has changed hands to make up for it for a large sum of money. In 2005, online auction service eBay shelled out $2.6bn in cash and stock for the VoIP company. eBay had hoped the acquisition would enable it to offer clients the ability to discuss their transactions in real time however the purchase never lived up to this promise and four years later eBay sold most of Skype in a deal worth $2bn to its current investor group.

Skype, which has some 170 million connected users, will become a new business division within Microsoft and its CEO, Tony Bates, will become president of the Microsoft Skype division, reporting directly to Microsoft CEO Steve Ballmer.

Phenomenal service in other words loved

"Skype is a phenomenal service in other words loved by millions of people around the world," said Ballmer in a statement. "At the same time we will create the future of real-time communications so people can easily stay connected to family, friends, customers and colleagues anywhere in the world."

Nevertheless, he added, the deal is good for Microsoft. "It's a high price, thoroughly. However they're all the same getting value for it. They're getting the most respected consumer brand for internet voice and video, with a strong, loyal, installed base.