Skype May Be Axed: eBay Faces Licence Court Case

The web phone call service Skype may be axed if its owner eBay loses a legal battle with its founders, the parent company has admitted.

More than 480 million people worldwide use Skype to make inexpensive calls over the web, using their broadband connections.

Internet firm eBay bought the popular service for more than £1bn in 2005. Skype enables users to make free calls from PC to PC through their internet connection.

Joltid, a company run by Skype's founders, still owns the technology behind it. It leases the peer-to-peer connection software to eBay.

A row over whether eBay broke its licence agreement could threaten a planned stock market flotation of the service or may force eBay to axe Skype altogether.

Documents submitted to regulators in the United States revealed the extent of the legal wrangles. Despite this action, eBay said it was "confident" about the outcome but if it lost, the "continued operation of Skype's business as currently conducted, would likely not be possible".

Background

eBay bought a controlling share of Skype but Joltid accused eBay of modifying a code used in the system, which it said went against the agreed terms.

As a result, eBay launched legal action at the High Court arguing that the software lease could not be terminated. Joltid then made a counter-claim threatening to pull out of the licence agreement.

The documents filed to the Securities and Exchange Commission reveal eBay is attempting to create new software in order to break its reliance on Joltid.