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Skype is in danger, owner says

By Matthew Shaer / July 31, 2009

According to eBay, which owns Skype, a legal battle has put the future of the online communications system in danger.

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For Skype, the line could be going dead.

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At issue is a key piece of software code licensed to Skype by a company called Joltid. For months, Joltid and Skype have been scrapping over the legal rights to the code – and now, the battle has gotten serious enough that eBay, which owns Skype, is getting worried. If Skype loses the right to the software code, "Skype's business as currently conducted would likely not be possible," eBay said in a quarterly filing with the US Securities and Exchange Commission.

The hitch sent tremors through the tech world, not least because eBay was reportedly considering letting Skype go public. "Waiting for eBay to spin off Skype into the stock market? Don’t hold your breath," Kevin Kelleher wrote on GigaOm. The legal battle "could delay the move until at least the second half of next year — and possibly put the entire offering into jeopardy," Kelleher wrote.

According to several news reports, Joltid claims that eBay broke the original licensing contract. EBay, meanwhile, seems unsettled by the affair – and concerned about the long-term implications.

"Although Skype is confident of its legal position, as with any litigation, there is the possibility of an adverse result if the matter is not resolved through negotiation," eBay wrote in the SEC filing. "Skype has begun to develop alternative software to that licensed through Joltid. However, such software development may not be successful, may result in loss of functionality or customers even if successful, and will in any event be expensive."

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