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Microsoft Skype: What's In It For Customers?

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Wednesday, May 11, 2011   

Microsoft is ponying up $8.5 billion to buy Skype with its user base of 170 million people. Microsoft plans to integrate Skype's video and voice technology into products such as Xbox, Outlook e-mail and Windows mobile phones.

Analysts will debate for some time whether it's a good business deal. But how will it affect Skype's devoted customers?

John Nichols, co-founder of FreePress, a national media reform organization, is concerned about too few companies controlling too many tiers of communication.

"They're both good companies in many ways. There's a lot to be said for both of them. But when you put them together, you have fewer options."

Matt Wood, associate director of Media Access Project, another watchdog group, says the deal may be a "net" positive. His organization hopes Microsoft will more strongly embrace network neutrality and other policies aimed at keeping the Web free, partly because services such as Skype which depend on access to existing networks potentially could be crippled by "large and anti-competitive carriers like AT&T and Verizon."

"Whatever consumer benefits are to come from this deal, though, we think it's essential that they be preserved and enhanced through open Internet protections and principles and policies that are enforced by the FCC."

A spokesman for the Federal Communications Commission had no comment. It is seen as unlikely the deal will require FCC approval.

Michael Ballmer, Microsoft's chief executive officer, along with Skype CEO Tony Bates, announced the deal at a news conference in Redmond, Wash.

"Microsoft and Skype together will bring together hundreds of millions - or, as Tony said, billions - of consumers and empower them to communicate in new and interesting ways."

Microsoft says more advertisements on its video service are likely.

Skype is free if used between Skype customers. Revenue comes from long-distance charges when Skype users call telephone numbers and mobile phones. That model raises the question of whether future success - in the form of more free users - will hurt the new division's bottom line, and how Microsoft would address the resulting revenue loss.


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