Facebook and Google court Skype about possible JV or sale

5 May 2011

Facebook and Google are realising VoIP giant Skype’s potential as an online advertising player and the two internet giants are each trying to interest Skype in a joint venture.

According to various reports, Facebook CEO Mark Zuckerberg has been in discussions about potentially buying Skype.

Google has held talks about a potential joint venture with Skype.

It is understood Skype is in strategic talks with other companies, as well as Facebook and Google.

Why Facebook and Google both need Skype

It makes sense. Facebook’s social network can do pretty much everything, from hosting and sharing video and apps and news content, but the missing link is the ability to do voice and video chat.

For Google, it would be a defensive mechanism to protect its online advertising empire despite the fact its Gmail and Google Talk services are enabled for voice and video conferencing.

For the first time last month, Skype introduced video advertising on its client software. Groupon, Nokia, Universal and Visa were among the first brands to sell advertising on the Skype platform, which accounts for 13pc of all calls globally.

While Skype is eyeing an IPO that could value it at US$1bn, an acquisition by Google or Facebook could net it more than US$3bn-US$4bn.

Niklas Zennström and his business partner Janus Friis founded Skype in Sweden in 2003. They sold Skype to eBay in 2005 for US$2.6bn.

In 2009, Zennström was part of the consortium that bought Skype from eBay and he now sits on the board of the internet telephone company. Zennström and Friis now run their own venture capital firm, Atomico, which has a fund of US$165m and has invested in 30 companies, such as Last.fm and Xobni.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years