Skype Founders Bid to Retake Skype from eBay

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Skype Founders Bid to Retake Skype from eBay

Well well well. It appears the legal fight between Joltid and Skype that I reported several days ago has deeper ramifications than I first thought. The NY Times is reporting that Skype's founders, Niklas Zennstrom and Janus Friis, are in talks with several private equity firms and along with their own financial resources, plan to make a bid to buy back Skype.

eBay has been shopping around Skype for the "right" price. Niklas, who founded Joltid along with Mr. Friss have an ace up their sleeve, namely certain licensing rights to the peer-to-peer technology used in Skype.

As I wrote nine days ago, there are serious implications over the Joltid lawsuit against eBay/Skype and I 'hinted' at Skype's potential demise:

Skype's technology roots are in Kazaa, the P2P file-sharing network. Both Skype and Kazaa were co-founded by Niklas Zennstrom. I now come to find out that Joltid is also founded by Niklas Zennstrom. No doubt when Niklas sold Skype to eBay for billions and then founded Joltid, he still retained licensing rights to his P2P technology. How did eBay spend billions on Skype and not retain exclusive rights to the P2P technology? Either eBay is a fool or Niklas is the best damn negotiator on the planet! I'm going to try and reach out to him to find out more.

If Joltid wins, does that mean the end of Skype? No more Skype for iPhone, just days after it was announced? Perhaps Niklas is playing some hardball to renegotiate the licensing terms? Hard to say who's right or wrong until I find out more.
Well, I was definitely onto something. The NY Times article just confirms my suspicions that Niklas is playing some hardball to keep other potential Skype suitors at bay, such as Google or Microsoft. If they want to get Skype at the lowest possible bidding price, scaring away potental rivals with a patent lawsuit is the perfect way.

Read this from the SEC filing:
As previously disclosed, Skype has been in a dispute with the licensor of certain key technologies and had terminated a "standstill" agreement that had been entered into between the parties, permitting either to take action against the other with effect from March 2009. On March 12, 2009, Skype Technologies S.A. filed a claim in the English High Court of Justice (No. HC09C00756) against Joltid Limited, a BVI company.

In connection with the license agreement between the two companies, Skype licenses peer-to-peer communication technology from Joltid, and Joltid has claimed that Skype has breached the terms of the license agreement. Following the filing of the claim, Joltid purported to terminate the license agreement. In particular, Joltid has alleged that Skype should not possess, use or modify certain software code (the "Code") and that, by doing so, and by disclosing the Code in certain U.S. patent cases, pursuant to orders from U.S. courts, it has breached the license agreement.

Very smart of Niklas to drive down the price of Skype. Hey, if he's in his legal rights, then all the power to him and Mr. Friss. I'm all for intellectual property. Ironic, that Niklas who started Kazaa, one of the biggest purveyors of stolen intellectual property over its shared P2P network is now using the intellectial property argument. I'm even more incredulous that eBay paid billions for Skype and didn't purchase the P2P technology used at the very core of Skype. It almost makes me root for eBay since surely no company or person could swindle another person or company out of billions of dollars. Uh, Madoff? Ok. Enron? Yeah yeah.

Anyway, I'm a huge fan of the Skype empire they've built, which although has grown since they sold it to eBay, seems to have floundered and hasn't for instance taken advantage of the popularity of social networking. I wrote in 2007 before Facebook really took off that Skype took trump Facebook.

So what are the ramifications of Niklas and Friis taking back Skype? Hard to say, but these guys are the P2P kings with Kazaa. Sure Bittorrent is the king of the block these days, but Niklas and Friis were at the P2P beginning. When they launched Skype, it took VoIP to a whole new level. Sure Joost, their video P2P venture tanked, but they're still 2 for 3. I wouldn't put it past these guys to take Skype to the next level. It'll be interesting to watch.

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