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Licensing Dispute Threatens Future of Skype

Posted by timothy on from the it-puts-the-lotion-on-the-remote-kill-switch dept.

tomlins writes "eBay is faced with the prospect of having to close down the hugely popular VoIP app Skype due to its reliance on proprietary code still owned by Skype's original founders, who are threatening to pull the plug on the licensing agreement they have with eBay."

42 of 282 comments (clear)

  1. Wait a minute... by ustolemyname · · Score: 5, Insightful

    eBay paid $2.6 Billion for a dinky little 8MB program, and don't even bother to make sure they got everything?

    Wow.

    1. Re:Wait a minute... by Shaiku · · Score: 5, Insightful

      I've been wondering for a long time why eBay even bought skype. There is no relationship whatsoever and it doesn't come as a surprise to me that they're recently looking to dump it. They paid an outrageous sum, didn't get full rights, and failed to leverage that technology in any way useful to the company. Bizarre move..

    2. Re:Wait a minute... by Anonymous Coward · · Score: 3, Interesting

      They got $2.6 Billion for a dinky little 8MB program, and still aren't happy?

    3. Re:Wait a minute... by broken_chaos · · Score: 4, Interesting

      They obviously did not think that one through very well. The article reads like they bought everything except the protocol, audio codec, or encryption algorithm (one or more of the three - the article isn't detailed enough to say which) - something which stops any replacement they create from being backwards compatible with any other versions of Skype. From that alone, it gives me the impression this is a patent issue, not a copyright issue. Perhaps we can "con" a large company into not supporting software patents out of this mess? ;-)

      I also wonder what the potential liability here is, given that portions of Skype are a paid service.

    4. Re:Wait a minute... by sopssa · · Score: 4, Insightful

      Because large companies usually try to expand to new areas too. For example see Virgin Group and even Microsoft, who are doing hardware (and xbox) even if their core business is in Operating Systems.

      You dont always need a direct connection between a parent company and the one bought - They can continue to operate like they have, which is even more true when you're buying an existing company.

    5. Re:Wait a minute... by sopssa · · Score: 4, Funny

      Well, if you're spending $1 million a day, that $2.6 Billion is only going to last 2600 days which is only about seven years.* You need to make sure your elder years will be good aswell.

      (* This calculation doesn't take into account one time purchases like houses, cars, airplanes, some nice island near hawaii)

    6. Re:Wait a minute... by Anonymous Coward · · Score: 5, Funny

      Microsoft, who are doing hardware (and xbox) even if their core business is in Operating Systems.

      I thought Microsoft was trying to get out of the Operating System business because they couldn't compete with Windows XP.

    7. Re:Wait a minute... by iYk6 · · Score: 4, Insightful

      There is no reason that a parent company and a bought company have be in related fields. However, it is common that they are. For example, eBay's auction and payment companies. Microsoft's OS and game consoles. Nintendo's game consoles and toys.

      The primary reason is that the parent companies assets, including human, are more aligned to fill the needs of the smaller company. eBay and Paypal was a perfect merge for Paypal, and now they effectively get twice the money per auction after forcing their eBay users to offer Paypal. When Microsoft started making Xboxes, they already had most of the operating system, which is a non-negligible part of a console, and more MS employees would be able to take apart and build a computer than say, the employees of a bank. Nintendo has a name which helps them sell toys.

      Sometimes, the smaller company can fill a need of a larger company. Perhaps an airline company will buy a computer retailer right before a major IT upgrade, and they will effectively have a discount.

      eBay and Skype fulfill none of the examples above and was truly a bizarre move.

    8. Re:Wait a minute... by k33l0r · · Score: 4, Informative

      Looking at the Skype founders' company website, they license three different products/technologies: PeerEnabler, PeerCache, and Global Index.

      In their words:

      • PeerEnabler is "a virtual Content Distribution Network"
      • PeerCache is "a cache product that enabled network operators to optimize peer-to-peer traffic"
      • Global Index is their flagship product and "is the world's most technologically advanced, scalable and field-tested peer-to-peer technology. Global Index creates a self-organizing and self-healing distributed storage, transport and data object management system that does away with the costs of traditional datacenter solutions and enables a range of applications from communications to broadcasting and beyond."

      They also explicitly state that Global Index is used in Skype.

    9. Re:Wait a minute... by linhares · · Score: 3, Insightful

      these dudes are claiming the title of world's greatest software assholes right from the hands of Gates, Ballmer & Co.

    10. Re:Wait a minute... by linhares · · Score: 3, Funny

      "I should have used paypal and get my money back :("

    11. Re:Wait a minute... by Shikaku · · Score: 4, Insightful

      On each login session, Skype generates a session key from 192 random bits. The session key is encrypted with the hard-coded login server's 1536-bit RSA key to form an encrypted session key. Skype also generates a 1024-bit private/public RSA key pair. An MD5 hash of a concatenation of the user name, constant string ("\nSkyper\n") and password is used as a shared secret with the login server. The plain session key is hashed into a 256-bit AES key that is used to encrypt the session's public RSA key and the shared secret. The encrypted session key and the AES encrypted value are sent to the login server.

      I would love if they broke all of those. Nevermind that the entire Skype protocol is decentralized already, which is a security risk already because you get random packets from random people using Skype.

      http://en.wikipedia.org/wiki/Skype_protocol

      Dumb AC troll.

    12. Re:Wait a minute... by sxpert · · Score: 3, Insightful

      which turns out to be security by obscurity.
      any security analyst can tell you how much this is bullshit ;)

    13. Re:Wait a minute... by maxwell+demon · · Score: 3, Funny

      In other words, they sell filesharing software? Quick, anyone tell the RIAA! :-)

      --
      The Tao of math: The numbers you can count are not the real numbers.
    14. Re:Wait a minute... by Ilgaz · · Score: 3, Interesting

      eBay buying Skype doesn't make sense. Compare it to Nokia buying Trolltech, maps companies, opening up Symbian with their own money and even starting to enhance their love-hate J2ME virtual machine.

      All makes sense if you think about them, in long term strategy and expanding to new markets and I speak about billions here. Billions spent to make things free and even allowing el cheapo Chinese manufacturers have a real OS on their cell phones and I can easily figure why. On eBay case, I can't.

      If Amazon purchased Skype, it would make absolute sense but not eBay. Amazon had their "expand to new horizons" since the beginning, remember how people laughed at them when they enabled competitors to advertise on their own pages? That was ages ago. Remember S3 first launch?

    15. Re:Wait a minute... by Ascagnel · · Score: 4, Interesting

      This was their intent. However, most sellers didn't want to have any exposure to potential buyers. That shouldn't come as much of a surprise, considering how hostile relations on eBay can get between buyers and sellers.

      --
      "It's the end of the world as we know it, and I feel fine."
    16. Re:Wait a minute... by calmofthestorm · · Score: 4, Funny

      This is the year of the Vista desktop!

      --
      93rd rule of Slashdot: No matter how obvious my sarcasm is, my comment will be taken seriously by someone.
    17. Re:Wait a minute... by schon · · Score: 4, Insightful

      Can you explain what part of this is "security by obscurity"?

      My guess would be the "closed source" part, thinking it's stopping people from finding bugs in the code.

      Hint: there's a difference between design and code. You quoted the design, and assumed that since the design is secure, that automatically translates to the code being secure too.

    18. Re:Wait a minute... by Philip+K+Dickhead · · Score: 4, Insightful

      It's NOT that they didn't want to contact each other.

      eBay couldn't figure out, once they examined the potential fraud angle, how to keep the buyer and seller from colluding to terminate auctions, and conduct the sale privately - without eBay getting the fee.

      This was one of the many scenarios they already faced in text communications - and is highly monitored. Voice - especially SkyPe voice - was harder to track, capture and analyze for ToS violations and fraud. This problem remains unsolved.

      --
      "Speaking the Truth in times of universal deceit is a revolutionary act." -- George Orwell
  2. Old bait-and-switch by Opportunist · · Score: 4, Insightful

    1. Provide a good service, a tool, a format.
    2. Make it cheap.
    3. Wait 'til everyone uses it because it was cheap.
    4. Jack up the price.
    5. Profit.

    --
    We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
    1. Re:Old bait-and-switch by gilgongo · · Score: 4, Interesting

      Does not work in case of skype you always can use google voice talk (which works better btw. skype is inferior) or directly SIP!

      One of Skype's big advantages is conference calling (and now, desktop sharing as well). I don't think either Google Talk nor any SIP providers I know do that. Ekiga would seem to be the nearest open alternative to Skype. Odd how the "downloads" page on ekiga.org makes no mention of their Windows version, which according to their wiki (where a Win32 download link appears), appears to be released almost in parallel to the Linux versions. Oh well, I'll mail them about that.

      --
      "And the meaning of words; when they cease to function; when will it start worrying you?"
    2. Re:Old bait-and-switch by Tony+Hoyle · · Score: 4, Informative

      Conferencing works on every serious SIP system, and has done since long before skype was even popular (and definately long before it supported any such features).

  3. Something is missing here by dynamo · · Score: 4, Interesting

    Why would the founders of Skype be threatening to revoke the licensing agreement? What is their side?

    And why would eBay pay billions of dollars for something without some guarantee that they'd be able to run it for a while?

    This is like a super-sized version the story about the music industry claiming that it's ridiculous that people would think they could forever listen to their DRM music.

    On an individual level, people allow themselves to be screwed for a few dollars at a time, just to be able to listen to the music but - paying more than 2 billion for most of something without a contract ensuring that it's not a total waste of money? Wow.

    1. Re:Something is missing here by qbast · · Score: 5, Insightful

      Why would the founders of Skype be threatening to revoke the licensing agreement? What is their side?

      Isn't it obvious? "Gimme more money!"

      And why would eBay pay billions of dollars for something without some guarantee that they'd be able to run it for a while?

      Their lawyers allowed themselves to get suckered? There is lesson to all those FUDing about how using open sourced pieces of software makes company vulnerable to legal problems. Guess what? With closed source the problem is the same, only worse - you don't have several widely used and well understood licenses - every company creates its own and every time you sign one you risk your legal team missing some well-hidden minefield.

      This is like a super-sized version the story about the music industry claiming that it's ridiculous that people would think they could forever listen to their DRM music.

      On an individual level, people allow themselves to be screwed for a few dollars at a time, just to be able to listen to the music but - paying more than 2 billion for most of something without a contract ensuring that it's not a total waste of money? Wow.

      Wow indeed.

  4. Ideal time to make it use open standards by worip · · Score: 3, Insightful

    Then chuck out the propriety code and make it work with open standards. Or if that does not exist, create an open standard and do the first reference implementation. I'm assuming e-bay has the right to distribute the executable under the Skype name.

    --
    A picture is worth exactly 1024 words.
  5. Dupe? Oh, no, different company... by argent · · Score: 5, Funny

    Didn't we just have this a few years ago... oh no, that was SCO forgetting to actually buy UNIX from Novell. I wonder how many other companies will turn out not to own the software they think they own?

  6. Re:Just replace the code by MrCoke · · Score: 3, Insightful

    Brave claim you make here since you haven't seen the code.

  7. a nelson moment by cas2000 · · Score: 4, Insightful

    "Ha ha"

    proprietary code. what else would you expect?

  8. These aren't good people... by supersat · · Score: 3, Informative

    Remember that before they started Skype, the founders of Skype created KaZaA, notorious for its immense crapfest of malware. I'm not at all surprised that they're trying to screw over eBay now.

    Of course, not that eBay is much better...

  9. Re:Ekiga by noundi · · Score: 5, Interesting

    Up until 3.0 Ekiga did suck dick, I agree. And prior to Ekiga the previous GnomeMeeting worked fine. Ekiga has only been sucking between 2.0 up until 3.0. If you haven't tried it lately I recommend the later versions. Good news is that it's a thriving project with constant updates, just look at the changelogs for the 3.2.X series alone. Whatever it is it's completely free and while it has sucked dick at certain times at least it will never let its users to get it up the ass.

    --
    I am the lawn!
  10. Re:No problem, there ar Open Source apps. by linhares · · Score: 3, Interesting

    not trolling here... can you make calls to landlines or cell phones from within Ekiga?

  11. A few years ago by Dunbal · · Score: 4, Interesting

    I used to communicate with my wife when she was out of town on business. The fortune 500 co she worked for had no problem letting her install Skype on her laptop, so it worked for both of us - free computer to computer calls when she was in Turkey, Argentina, Hong Kong, etc. Our biggest problem was the time zone difference.

          Then about a year ago the company's IT department decided that Skype was "bad", and disabled it on all company laptops. My solution? An ubuntu live CD and ekiga. Now we can communicate again when she's away.

    --
    Seven puppies were harmed during the making of this post.
  12. i feel a reimplementation comming on by timmarhy · · Score: 3, Insightful

    these guys are shooting the goose that laid the golden egg. ebay will merely strip out the offending code and implement their own solution. maybe a little painful but i can assure you they aren't throwing up their arms and saying this isn't fixable, lets give up on that 2 billion bucks we spent...

    --
    If you mod me down, I will become more powerful than you can imagine....
  13. Whatever happened to Wengo? by schweini · · Score: 4, Interesting

    On a related note: there used to be this nice open source skype-alternative (using SIP and all that) called openwengo, but i cant find it anymore. the company also offered a flash based SIP client (wengovisio), and a flash-based teleconferencing thing (wengomeetings), but i cant find any of them anymore. quite a pity.

    a little side-rant: the person that designed the SIP protocol in such an incredibly NAT-unfriendly manner should be drawn and quartered. I know there are work-arounds, but i blame this NAT-unfriendliness for the rise of skype, and now we're stuck with that nonstandard closed protocol crap. I think it was the glorious idea of incorporating the IP addresses inside the SIP packets, or something like that. sigh.

    on a related note: whatever happened to Google's open-source VoIP thingy that incorporated with XMPP/Jabber? I think it was called 'Jingle', but I haven't heard a lot about it since then. And what protocol is Google using for their video-chat in gmail?

    1. Re:Whatever happened to Wengo? by TheRaven64 · · Score: 5, Informative

      the person that designed the SIP protocol in such an incredibly NAT-unfriendly manner should be drawn and quartered

      SIP was created in 1996. Widespread deployment of NAT didn't begin until several years later. Back then, everyone thought we'd have moved to IPv6 before v4 addresses became sufficiently scarce that NAT looked like a good idea.

      whatever happened to Google's open-source VoIP thingy that incorporated with XMPP/Jabber? I think it was called 'Jingle', but I haven't heard a lot about it since then.

      It's still called Jingle. It's been published as a series of XEPs (XMPP Enhancement Proposals; think XMPP-specific RFCs), and anyone can implement it. It has a number of transports (via proxy, in-band, direct connection, STUN) and can be used to negotiate pretty much any stream connection.

      And what protocol is Google using for their video-chat in gmail?

      Jingle.

      --
      I am TheRaven on Soylent News
    2. Re:Whatever happened to Wengo? by Digana · · Score: 3, Informative

      It became qutecom.

      The code is sitll there, but the project hasn't seen many updates recently, and development has slowed down to almost nothing. :-(

  14. Re:Ekiga by Shikaku · · Score: 3, Informative

    https://help.ubuntu.com/community/Ekiga#Encrypt%20your%20calls

    Right.

  15. Re:Nice by TheRaven64 · · Score: 3, Informative

    Exactly. Pick up any Nokia phone with WiFi and there's a SIP client you can use. It's integrated into the rest of the system, and you can set it as the preferred method of calling when there is a WiFi signal. You have the choice of a number of different SIP to POTS gateways, so you can pick whichever one gives the best value for the kind of calling you do.

    --
    I am TheRaven on Soylent News
  16. It's all a ploy to buy Skype on the cheap by discordare · · Score: 3, Interesting

    The original founders sold Skype to eBay for US $2.7 billion. eBay has now written down the value of Skype to US $1.7 billion, and are planning to spin off the company next year. Along come the founders and threaten to cripple Skype. It seems to me that this drives the potential price of Skype much lower than even the $1.7 billion. When the public offering is made, the original founders come in, buy the now really cheap stock, and then somehow change their minds about licensing their technology for Skype. The price goes up up up, and the guys make another couple of billion! Brilliant....

  17. Re:Ekiga for MacOS X? by Lord+Satri · · Score: 3, Informative

    Here's a mac client: http://xmeeting.sourceforge.net/pages/index.php

    Thanks, but you know it doesn't sound stellar when the last item in their "news" is dated 2007-07-03... :-/

    --
    Animoog.org
  18. eBay got a bad deal? by CFD339 · · Score: 4, Funny

    I guess they'll have to make a negative outcome rating on the seller, and attempt to get resolution through the.....oh, wait....then skype will just neg them back and we already know how the "resolution" process favors the sellers. I guess eBay is just out of luck. What a shame.

    --
    The problem with quotes on the internet, is that nobody bothers to check their veracity. -- Abraham Lincoln
  19. The reason for Skype by achacha · · Score: 4, Informative

    At the time of the Skype purchase, eBay was desperately trying to break into the China market against TaoBao (or something like that) that was beating them. Meg The CEO, in yet another display of ineptitude, after a long business trip (a.k.a vacation) in China got a hold of a rumor that Chinese auctioneers preferred to talk on the phone rather than email via anonymous email (which is how eBay was able to keep potential gray market auctions low) and that Skype was going to allow the buyer and seller a better route of communication and allow eBay to dominate China. How no major executive foresaw that once the buyer and seller could communicate by Skype then would just close the auction and negotiate offline and avoid seller fees; everyone but the powers that be saw this coming.

    The asking price of 2.8 billion + 2 billion (or something ridiculous like that) if they met some internal goals (it was as insane as it sounds and at the time every blog, publication, news source was laughing outloud). Needless to say Skype missed their goal gloriously, did not get 2 billion and at that time it came out that in yet another stroke of brilliance by Meg the underlying technology was not part of the 2.8 billion. The only people who benefited were the founders of Skype who must still be laughing.

    If I am buying a chat program for 2.8 billion I better be getting everything... anyhow, all this is public knowledge and a sad chronicle of how incompetent CEO can keep making mistake after mistake and be seen as successful because the company was hugely profitable despite their best efforts. For the record I sold my stock in eBay as soon as I read about this mess and it was at 44$usd at the time, it fell to almost 20$usd when Skype was reported as a write-down (a.k.a. complete loss) in the 10Q and never quite recovered.