Subsidiary of Microsoft, which develops Skype
Skype Technologies S.A.R.L (also known as Skype Software S.A.R.L, Skype Communications S.A.R.L, Skype Inc., and Skype Limited) is a telecommunications company headquartered in Luxembourg City, Luxembourg, whose chief business is the manufacturing and marketing of the video chat and instant messaging computer software program Skype, and various Internet telephony services associated with it.[1] Microsoft purchased the company in 2011, and it has since then operated as their wholly owned subsidiary;[2] as of 2016, it is operating as part of Microsoft's Office Product Group. The company is a Société à responsabilité limitée, or SARL, equivalent to an American limited liability company.
Skype, a voice over IP (VoIP) service, was first released in 2003 as a way to make free computer-to-computer calls, or reduced-rate calls from a computer to telephones. Support for paid services such as calling landline/mobile phones from Skype (formerly called SkypeOut), allowing landline/mobile phones to call Skype (formerly called SkypeIn and now Skype Number), and voice messaging generates the majority of Skype's revenue.
eBay acquired Skype Technologies S.A. in September 2005 and in April 2009 announced plans to spin it off in a 2010 initial public offering (IPO).[3] In September 2009,[4] Silver Lake, Andreessen Horowitz and the Canada Pension Plan Investment Board announced the acquisition of 65% of Skype for $1.9 billion from eBay, valuing the business at $2.75 billion. Skype was acquired by Microsoft in May 2011 for $8.5 billion (~$11 billion in 2022).
As of 2010, Skype was available in 27 languages and has 660 million worldwide users, an average of over 100 million active each month,[5] and has faced challenges to its intellectual property amid political concerns by governments wishing to control telecommunications systems within their borders.
Palo Alto office
The Skype North American headquarters was opened in early 2013, after the design was completed by San Francisco architect firm Blitz. Located in Palo Alto, California, the space is designed to encourage interaction and spontaneity, while also introducing a sense of humor into the workplace. Fake lawn, cushions that look like boulders, open spaces, and high ceilings accommodate 250 employees in a 5,000 square metres (54,000 sq ft) building. The Palo Alto headquarters also houses a games room complete with a pool table and table football machine. The office's silver LEED Silver certification means that it received between 50 and 59 points for its environmentally friendly construction.[68][69][70]
Legal issues
P2P licensing dispute lawsuit and IPO
In its 2008 Annual Report, eBay admitted to an ongoing dispute between it and Joltid Ltd. over the licensing of its peer-to-peer "Global Index" technology in its application.[71] It announced that it terminated a standstill agreement, allowing either company to sue. On 1 April 2009, eBay filed with a UK court to settle the legal dispute. A few days later, eBay announced the planning of a public stock offering in 2010 to spin off Skype as a separate, publicly owned company.[37] Some media outlets characterized the proposed sale and ongoing provision of Skype as being under threat because of the concurrent dispute.[72][73]
On 1 September 2009, a group of investors led by Silver Lake bought 65% of Skype for $1.91 billion (~$2.54 billion in 2022).[74][75] This prompted Joltid to countersue eBay on 17 September 2009.[76]
Both settled the simultaneous suits in November, resulting in Joltid's part-ownership of the newly formed Skype Limited. The final holding share were with Silver Lake reducing their share to 56%, Joltid entered at 14%, and eBay retained 30%.[77]
Other intellectual property challenges
Streamcast lawsuit
StreamCast Networks filed a complaint in U.S. District Court in Los Angeles, alleging theft of its peer-to-peer technology and violation of the "Racketeer Influenced and Corrupt Organizations" statute. The complaint, titled; StreamCast Networks Inc v. Skype Technologies, S.A., was filed on 20 January 2006 in Federal Court in the Central District of California and assigned Case Number, 2:2006cv00391. The $4.1 billion lawsuit did not name Skype's parent company, eBay, when initially filed. Streamcast's lawsuit was subsequently amended on 22 May 2006 to include eBay and 21 other party defendants.
In its lawsuit, Streamcast sought 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. The lawsuit was finally dismissed in a decision filed on 19 January 2007.[78]
IDT lawsuit
On 1 June 2006, Net2Phone (the Internet telephone unit of IDT Corp.) filed a lawsuit against eBay and Skype accusing the unit of infringing U.S. patent 6,108,704, which was granted in 2000.[79] The lawsuit was settled between the parties in 2010.[80]
GPL lawsuit
In July 2007 Skype was found to be guilty by a German court of violating the GNU General Public License in one of its for-sale products, the SMC WSKP100.[81][82]
Political issues
China 2005
Skype was one of many companies (others include AOL, Microsoft, Yahoo, Cisco) which cooperate 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 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 speculate that if companies stopped contributing to the authorities' censorship efforts, the government could be pressured to change.[83]
Niklas Zennström, then chief executive of Skype, told reporters that its joint venture partner in China was operated in compliance with domestic law. "TOM Online had implemented a text filter, which is what everyone else in that market is doing," said 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."[84]
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 Federal Communications Commission (FCC) successfully applied the Communications Assistance for Law Enforcement Act to allow wiretapping on digital phone networks. Skype was not compliant with the Act, and stated that it does not plan to comply.[85]
United States, Transparency and PRISM 2013
Starting in November 2010, Skype has been participating in a U.S. Government spy program titled PRISM, allowing the National Security Agency (NSA) unfettered access to people's chats and video and audio communications. However, it was not until February 2011 that the company was formally served with a directive to comply, signed by the attorney general.[86]
In March 2013, the company issued transparency reports.[87] confirming long held beliefs that Skype responds to requests from governments. Microsoft's General Counsel wrote to the US Attorney General, outlining the company's concerns in July 2013 in a[88] blog from Brad Smith including a copy of the letter to the US attorney.
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788 (2010)
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