Skype Limited

Skype Limited is a Luxembourg based company developing and operating a well-known, popular VoIP computer telephony program. It has been purchased by eBay since its foundation in 2003 from Niklas Zennstrom and Janus Friis.

Founding

Skype was founded in 2003 by Niklas Zennstrom and Janus Friis, whose main intention was to develop a piece of software which would revolutionise telephone calls. Allowing users to speak to each other via computers promotes the use of the Voice over Internet Protocol and the use of computers in the technologically advancing world. Users are able to talk for free, an incentive to future and present members.

Takeover by eBay

The auction site eBay began talks with Skype in September 2005. [http://news.bbc.co.uk/1/hi/business/4228866.stm] On 12th September 2005, it was announced that eBay would purchase Skype in a deal worth approximately USD$2.6bln, in up-front cash and eBay stock. The transfer of ownership began and eBay officially acquired Skype on 14th October 2005.

However, analysts were not impressed with eBay's move, saying: "I don't see a lot of point to eBay buying Skype" [http://news.bbc.co.uk/1/hi/business/4228866.stm] , or "If eBay were to make this sort of move it would basically be admitting that 'our core market is decelerating". At the time, eBay had been purchasing many companies in moves to boost its market position and increase its annual revenue. However, eBay stated that their intention was to implement Skype into their auction website to allow buyers and sellers to speak prior to bidding and to create a powerful internet environment. Speaking in 2005, eBay chief-executive Meg Whitman said: "Communications is at the heart of e-commerce and community".

Products

Skype Technologies released their first product, Skype, originally as a simple computer-to-computer, or computer-to-telephone program. Support for paid services such as SkypeOut, SkypeIn and receiving voicemail messages allows the company to generate its revenue as well as making local and international telephone calls easier to perform via your computer, sometimes cheaper than other company's rates for similar services.

Worldwide

Skype Limited has locations around the world including Europe, Asia and the United States. Its headquarters are in Luxembourg.

Skype is available in 27 languages and currently has 100 million worldwide users. [http://about.skype.com/corporate_factsheet.pdf]

Legal and political aspects

Skype faces challenges from two main legal and political directions: challenges to its intellectual property and political concerns by governments wishing to control the telecommunications systems of the respective countries.

Skype's technology is proprietary and closed to outside review. It is unknown to what extent it can potentially intrude upon other parties' patents and copyrights. It is not unreasonable, therefore, to expect legal challenges from third parties concerning Intellectual Property issues.

Legal challenges

Streamcast lawsuit

In January, 2006, StreamCast Networks filed a complaint in U.S. District Court in Los Angeles, accusing Skype of stealing its peer-to-peer technology. The $4.1 billion lawsuit did not initially name eBay, Skype's parent company; however, the lawsuit was amended in a filing with Federal Court in the Central District of California on May 22, 2006, to include eBay and 21 other parties as defendants.

Streamcast seeks a worldwide injunction on the sale and marketing of eBay's Skype Internet voice communication products, as well as billions of dollars in unspecified damages.Fact|date=February 2007

IDT lawsuit

On June 1, 2006, Net2Phone (the Internet telephone unit of IDT Corp.) filed a lawsuit against eBay and Skype accusing the unit of infringing US patent|6108704, which was granted in 2000. [cite news | url=http://www.businessweek.com/bwdaily/dnflash/jun2006/nf2006066_9375.htm | title=Skype Under Attack | publisher=McGraw Hill | work=Business Week | date=June 6, 2006 | author=Pallavi Gogoi]

Political issues

China 2005

For a brief period, SkypeOut was blocked in some regions of mainland China (notably Shenzhen) by the operator China Telecom for undisclosed reasons; it has been speculated that this may relate to SkypeOut's ability to take lucrative international and long-distance business away from the People's Republic of China's state-controlled telecommunications companies.Fact|date=February 2007

Skype is one of many companies (others include AOL, Google, Microsoft, Yahoo, Cisco) which have cooperated with the Chinese government in implementing a system of Internet censorship in mainland China. Critics of such policies argue that it is wrong for companies to assist in such policies, which might allow them to profit from censorship and restrictions on freedom of the press and freedom of speech. Human rights advocates such as Human Rights Watch and media groups such as Reporters Without Borders state that in their view, if companies stopped contributing to the authorities' censorship efforts the government could be forced to change. [cite web | url=http://www.theregister.co.uk/2006/04/20/skype_china_censorship_row | title=Skype uses peer-pressure defense to explain China text censorship | publisher=The Register | accessdate=2006-06-18]

Niklas Zennström, chief executive to Skype, told reporters that its joint venture partner in China is operating in compliance with domestic law. "Tom Online had implemented a text filter, which is what everyone else in that market is doing," said Mr Zennström. "Those are the regulations," he said. "I may like or not like the laws and regulations to operate businesses in the UK or Germany or the US, but if I do business there I choose to comply with those laws and regulations. I can try to lobby to change them, but I need to comply with them. China in that way is not different." [cite news | url=http://www.ft.com/cms/s/875630d4-cef9-11da-925d-0000779e2340.html | title=Skype says texts are censored by China | publisher=Financial Times | work=FT.com |date=April 18, 2006]

France 2005

In September 2005, the French Ministry of Research, acting on advice from the General Secretariat of National Defence, issued an official disapproval of the use of Skype in public research and higher education; some services are interpreting this decision as an outright ban. The exact reasons for the decision were not given.

United States, CALEA 2006

In May 2006, the FCC successfully applied the Communications Assistance for Law Enforcement Act to allow wiretapping on digital phone networks. Skype is not yet compliant to the Act, and has so far stated that it does not plan to comply. [ [http://www.voip-news.com/news/features/skype-calea-compliance-061206/ Can Skype Keep Its Secrets?] ]

India 2006

In December 2006, the Indian government announced it is preparing a crackdown on Internet telephony services, citing security risks and loss of revenue.Fact|date=September 2007 The clampdown is targeted at outsourcers and other Indian IT businesses that use foreign-owned Internet telephony services, such as Skype and Yahoo!, to cut their phone bills and evade the six percent revenue share and 12 percent tax imposed on local services by the government. According to The Times of India, companies must reveal the names of licensed service providers they purchase bandwidth and Internet telephony minutes from. Companies will also have to undertake that they will not use the services of unlicensed Internet service providers.Fact|date=September 2007

United Arab Emirates 2006

Skype was abruptly blocked in the UAE for undisclosed reasons—Skype users in the United Arab Emirates are being blocked from the Skype.com site, which prevents them from buying minutes for use with SkypeOut and taking advantage of deeply discounted international calling rates. The blockage has been speculated to originate within Etisalat, the only ISP in the UAE.Fact|date=September 2007

Oman

The Sultanate of Oman has also blocked access to the Skype.com website preventing users from accessing Skypeout in order to maintain Omantel's monopoly on the telecommunications market in the country.Fact|date=September 2007 This has also to do with security issues as well as economic ones as it is difficult to monitor the calls made with Skype.Fact|date=September 2007 Many other Persian Gulf countries pursue similar policies regarding Skype for largely the same reasons.

Germany

Skype was found to be guilty of violating the GNU General Public License in one of its for-sale products, the SMCWSKP 100 [ [http://www.itwire.com/content/view/13690/53/ iTWire - Skype cops GPL violation conviction in German court ] ]

Criticisms

Skype is closed source and uses proprietary protocols. The success of GSM for instance, is due in part to the universally accepted and open source of that protocol. Currently, VoIP is a booming market and having a universal protocol is favourable. Opponents to Skype would rather see SIP, an open source protocol, be implemented instead of Skype's proprietary protocol.

References

External links

* [http://www.skype.com Skype.com]
* [http://about.skype.com About Skype]
* [http://about.skype.com/corporate_factsheet.pdf Corporate Factsheet]
* [http://SkypeJournal.com Skype Journal] , independent coverage