A New Platform and New Owners for Skype in E-Stonia

In recent months, Skype has attracted a lot of attention. This company, rooted in the Baltics, has begun to see profitable returns as the number of users, amount of talk time, and revenues are increasing. Additionally, the potential for growth is limitless as Skype has been approved for use with Apple products. eBay bought Skype four years ago, for $2.6 billion, the pride of aptly nicknamed “EStonia,” and a true tech start-up success story.

With eBay as a parent company, Skype gained notoriety, a sense of legitimacy, and publicity. Later, eBay stated that it paid too much for the company, writing down the value to $1.2 billion, surprising industry followers. Recently, parent company eBay announced the sale of Skype, no doubt a result of growing impatience with revenues and the pinch of the market slowdown; all this despite registered users growing from 53 million, at the time of the sale, to 483 million.

In a remarkable move, on September 1, 2009, eBay sold a 65 percent share. The deal valued Skype at $2.75 billion, and EBay retained a 35 percent stake in the company. After the sale, a lawsuit was filed regarding the license of the core technology used by Skype, raising questions over its future. Another controversy is developing about Skype: the platforms allowed for the application. The iPhone and iPod touch are two revolutionary products developed by Apple. Initially, Apple sparked controversy when federal regulators noticed that Skype (and competitor Google Voice) was unable to be used as an application, and suspected that AT&T, the US mobile coverage provider, was behind this decision.

Certainly, if Skype was allowed to run on the iPhone and the iPod, profits would suffer as users would make low-cost phone calls using Skype. Techies everywhere wondered if Apple would begin policing applications and crackdown on unapproved providers. In October 2009, again Skype made headlines, with a statement from AT&T, which retracted its initial position on the matter. This celebrated announcement meant that Skype was now allowed to run on the 3G network, not only wi-fi. Surely this puts AT&T at a risk for lost profits, and the final results of this decision remain to be seen.

Although the legalities of Skype – the backbone of the coding, and the availability of the application – remain uncertain, one thing stands out. Skype is rooted in Estonia, and despite transition of ownership twice, Skype is here to stay. This slice of Silicon Valley is sure to inspire programmers and potential investors for future Baltic partnerships and continue bringing a positive view to Tallinn.


By Megan Kenna