How is Skype related to Kazaa? What does a peer-to-peer network do? And was the eBay acquisition of Skype really one of the worst deals in tech history (spoiler: no it was not)?
Welcome to tech Stuff, a production from iHeartRadio. Hey there, and welcome to tech Stuff. I'm your host, Jonathan Strickland. I'm an executive producer for iHeartRadio. And how the tech are you? I've got a question for you. Do you all remember Skype? Which, actually, if I'm being honest, that's kind of a baited question because Skype is still a thing. It's not like it doesn't exist anymore. According to a Microsoft blog post from February twenty twenty three, quote, more than thirty six million people use Skype daily to connect through phone calls and chats across borders and around the world end quote. Skype is a communications app. It incorporates voice and video and text chat into the application, and it's been around for a while, and Microsoft was not always the own of that application. In fact, I've talked about Skype a few times over the history of Tech Stuff. I did an episode many years ago about some of the worst acquisition deals in tech history, or what are perceived to be the worst deals in tech history. These are deals that cost a lot of money, but ultimately they didn't perform the way the parties expected them to, or worse in some cases, they led to the downfall of one or all of the parties involved. Skype was arguably part of one of these massively bad deals, and I've talked about it several other times in this show, but I've never dedicated a full episode to Skype itself. So I thought it was high time to change that. And there's a lot to talk about. In fact, there's so much that it's going to be split up over two episodes. Now. Tomorrow we're gonna have another episode of Smart Talks with IBM, but on Wednesday, I plan on bringing the second half of this story, so we'll be back with more of this on Wednesday's episode. This whole idea was prompted, by the way, because while I was doing research for a totally different episode, I found an article from July of twenty twenty three titled the Rise and Fall of Skype. Now that stirred a memory in me, so I plopped on over to YouTube, and sure enough, I saw a video that I was on the channel Company Man that also was titled the Rise and Fall of Skype. Now. That video came out three years ago, so in twenty twenty there was the Rise and Fall of Skype. Then I found another video from May twenty twenty three, so from this year, and it was on Tech Inspection and it was called Skype the Rise and Fall and Rise again. Then there was another video from July twenty twenty three on CNBC titled what Happened to Skype? So obviously Skype is something that's had a whole lot of ups and downs, and enough for folks to imply that the end days were near multiple times over the last several years. I'm reminded of those doomsday cults that would proclaim the earth would end on a certain day, and when that day would come and go, the cult would say, oh, you know what, we forgot to carry the one, so now it's actually this other date, rents and repeat. But why, what the heck has happened? What has gone on with Skype to warrant these kinds of articles and videos. Why during the lockdown of twenty twenty did Zoom take center stage. Why wasn't Skype the big name that we talked about. Why does Microsoft tend to de emphasize Skype in favor of other tools, notably stuff like Microsoft Teams. So we're going to look at the history of Skype. The company the app and the phenomenon. Let's begin. Our story begins not in video conferencing or even voiceover Internet Protocol aka VoIP. No, it actually it begins with an era of swashbucklers and buccaneers. Wait, no, I'm sorry, I'm actually thinking of the wrong kind of pirates. It begins in a tumultuous era in which massive media companies were going nuclear in an effort to totally wipe out piracy at IP theft, and they didn't care if innocent technologies were caught up in the process. It certainly didn't care if everyday normal people were caught up in the process. That was actually part of the intimidation campaign. But that's actually another story. But what we're talking about here are the early days of peer to peer technolology. So it actually benefits us to understand how this works because ultimately it's going to play a big part in the Skype story. And in my opinion, the best way to do that is to compare and contrast peer to peer networking with your typical server client situation. Okay, so in a traditional network, you've got servers, like on the web, you've got web servers for example. These are the computers that are housing the stuff that you want to access. This is where all the stuff you want to visit or see or interact with. It's where it quote unquote lives on the Internet. It's on one of these servers. So let's think of a basic function like visiting a web page. So what's really going on when you visit a web page is that you're a computer through a web browser. This is the client sends a request that goes out to a specific web server. It's the web server that is home to the document the web page in this case that you actually want to access and see. So your browser, the client asks the server, the computer holding the document, may I please have a copy of this specific web page? And assuming you have permission to access that web page, the server then sends it along and your browser will display the page for you to see and interact with. So in this system, you've got a centralized authority, the web server. So actually you've got lots of centralized authorities. They are authorities over whichever documents they host. So that means there's a single place for you to go in order to get what you want. If that source gets overwhelmed for some reason, let's say there's a heavier than normal amount of traffic. Maybe there's a distributed denial of service attack against the server. Well, that affects your experience. The entire Internet is made up of servers that act as the sort of centralized silos of data. I should also mention that typically there are also backup servers, so there's redundancy in the case that primary servers go down. I say that just so that you don't think that there's one and only one computer out there that hosts your favorite website or whatever. Anyway, let's compare this with peer to peer networks. Back in nineteen ninety nine, a college student named Sean Fanning created a service built on top of this different approach to networking. So, instead of having centralized servers serving various clients, Fanning's approach had peers. Every computer that joined the network was a peer. It was equal to every other computer on the network. Each computer could share resources and information with other computers on that network. Fanning developed some software to facilitate this, and in the software, you could create and designate a folder as being shaable. Other computers that on that peer to peer network could access anything that was stored inside this shareable folder on the individual's computer, just as your computer could access similar folders on other computers that were joined to this network, which made it very easy to distribute files across the network. It was a very efficient approach. Let's say you joined the network after it's been around for a while, and a lot of computers on this particular network happened to have a file that you need, and they have stored that file in these shared folders. So your computer could start a download and even shift to pull data from a different source if for some reason, the connection between you and the first source you connected to starts to go bad. Let's say that there's like some Internet traffic spike or something. Your download could shift back and forth to continue downloading that file from different sources, assuming that all the same file. Fannings software was called Napster. Now you may have heard of it, and while you could use Napster to distribute pretty much any kind of file, Fanning's emphasis was on digital audio, primarily in the form of MP three files. The software took off at college campuses, where students had access to decent Internet connections. They could rip music off their CD collections. They could convert these digital audio files to MP three's, they could store those MP three's in a shared folder for Napster. Then they could hop on Napster and look for other music to fill out their collections while offering up their own collection for other folks to download. So folks were sharing music like crazy lots more. As these peer to peer networks grew, they became more efficient. Right, if you have lots and lots of people who all have the same files, it suddenly becomes much more efficient to distribute those files. And so music sharing or piracy, depending on your point of view, was really becoming very popular enter the music studios, primarily led by the band Metallica, which really went hard after Napster. Now, it's a pretty well known fact that established media will eye any innovation that involves home media with suspicion. The recordable cassette tape, the VHS tape, the writeable CD, digital audio files, all of these were viewed with consternation from the music industry. They pushed back against all of these innovations to some extent. In some cases, they tried to prevent it from even becoming a thing because they argued that it constituted an existential threat to the entire industry. But this time it really felt like an existential threat, right because recordable cassettes, Yeah, that could potent actually eat into a little revenue. But you know, making a copy of a cassette or copying music off of some other medium to cassette, that takes a lot of time. The quality isn't always there. It's not like the ideal way of pirating music. But here we were talking about addigital audio file that could end up spreading across hundreds of thousands of computers. Now it was getting scary. Folks could download the Napster software, they could hop onto a peer to peer network, and they could pirate tons of content. And like I said, the music industry would go nuclear against Napster and its users, demanding huge amounts in damages along the way, amounts that far outstripped anything that the company's lost. And also, as I've said many times before, you can't actually prove that there was a loss in revenue at all when someone downloads something with out paying for it. And the reason you can't prove a loss in revenue is you can't prove the person who stole the thing Otherwise would have paid for it, and no physical copy of the thing had been lost, so it's not like you can't sell the things. Still, the thing still exists. Someone just made an illegal copy of it. But you also can't say that the person who made the illegal copy would have otherwise bought the thing, so you can't prove there's a loss in revenue. This is like a fundamental flaw in the way the music industry went after pirates and services. It's entirely possible that the pirate, were they honest, just would have gone without rather than having bought the media or whatever, which means you haven't lost any revenue. Right Like, if I don't buy your thing, it doesn't mean I stole from you. It just means I didn't buy it. But the copying part made it much more complicated. Anyway, that's a rabbit hole we can't really go down. I've talked about it in previous episodes. Anyway, So, oh, what does all this have to do with Skype? Well, a judgment on the Napster case brought against the app by the aforementioned ban Metallica was going on. There was also a pair of developers out in Amsterdam who launched a similar peer to peer service. This one was called Kazah. They had been working on it since two thousand and While Napster took a rather lackadaisical stance on the whole sharing of copyrighted material, Kazab at least outwardly urged users to not engage in piracy. You could still share files across the network, but they were supposed to be ones that you had the authority to share. Of course, lots of folks didn't really follow that philosophy, and piracy across Kazab wasn't really that different than piracy across Napster, which would ultimately lose its various court cases. Now. The developers for kaza were Nicholas Zenstrom and Janis Freese, who had been working together since the mid nineties. Zenstrom is a decade older than Freeze, and both of them worked at a telecommunications company in Denmark called Tella II. The two men are really interesting contrast. Zenstrom is from Sweden. He earned degrees in engineering, physics, and business administration. He started at Tella IO back in nineteen ninety one and rose through the ranks pretty quickly. He's an entrepreneur who has led numerous companies over the course of his career. Janas Freese is from Denmark, and unlike Zinstrom, Freeze doesn't hold degrees. In fact, he's a high school dropout. He was one of those kids who became fascinated with programming and networks early on, and rather than pursue an education, he jumped into working at companies that were introducing internet services. Now keep in mind this was in the early days of the general public even learning what the Internet was and how to access it. Freeze joined Tella two in nineteen ninety six. He would run the customer support department and worked with Zenstrom on a few projects at company. The two men worked well together and they decided to leave Tellatu to create their own company and product, and Kaza was born. I was born as the music industry was pushing hard against peer to peer networks. Okay, we're gonna take a quick break to thank our sponsors. When we come back, we'll talk more about Kaza and then Skype. Okay, before the break, I was talking about Zinstrom and Freeze, the two guys from Tella to who left the company to form their own company to create Kaza. They were also joined by a trio of Estonian software developers, and I'm going to butcher the pronunciation of these names, just as I always do. But here we go John Tollin, Atti Heinla and Pritt Casasalu. These developers would become the core team behind Kazah and later on Skyte Mike Napster. Kaza became the target of lawsuits. It was another peer to peer sharing network and lots of people were using it to share content that they didn't have their right to do so. In early two thousand and two, the company suspended downloads of the software because it was under so much pressure, and then Zinstrument Freeze made the decision to sell Kaza to another company called Sharman Networks, located out of Australia. A fun sign note. The owner and operator of Sharman Networks was a matter of secrecy, which was probably necessary due to the scrutiny of the music industry at the time. Nicki Hemming served as CEO, but the music industry suspected that there might have been a co owner lurking in the shadows and really went after them. Others suspected that Hemming was the sole owner, that she had done just a bang up job at creating a complicated corporate structure that obfuscated that fact. Now, I suppose that's a story for another time, but it does point out that selling off Kaza was a really good and timely decision, particularly since Australian authorities, under the direction of the music industry, raided Sharman Network's offices in relation to Kaza in two thousand and four. By that time, the original team was well clear of it. But let's get back to Zenstrom and Freeze and the Estonian developers. It's two thousand and two. They've sold off Kaza, and they started to ideate on how to leverage peer to peer technology in a way that you know, wouldn't necessarily bring down the music industry's wrath upon them or any other media industry. So they started looking at stuff like voiceover Internet Protocol or VoIP. To do that, they founded a new company called Jolted Joltid, And while VoIP was an early focus, the company really was about creating a way for here to peer networks to scale quickly. We'll chat about that in just a moment. To be clear, though VoIP wasn't brand new in two thousand and two, they didn't invent VoIP that actually had its history back in the mid nineteen nineties when a company called vocal Tech developed this protocol, and it does just what it says on the ten. It utilizes the Internet to facilitate voice calls between people. So instead of connecting via the plane old telephone service aka POTTS and yes it's a real acronym, users would instead make calls over the Internet, and thus they would bypass things like those pesky long distance phone charges. For those of y'all who have never had to deal with that, it used to cost extra to make telephone calls outside of your immediate service area. In a few places like here in the United States, you used to have to pay extra for a phone call if you wanted to call someone who lived further than a couple hundred miles from you. With VoIP, you could even make an international call and still bypass those expensive fees. So you could see why it would be really attractive. Now. Some of the early VOPE applications were purely PC based, so it wasn't super convenient. You had to be at your computer to make a call, and the person on the other end had to be at their computer to receive a call. Early VOPE systems didn't allow for voipe to landline or cell phone calls or vice versa. But we're talking about the mid nineties when a good chunk of folks didn't even have a cell phone, and smartphones were essentially another decade out. I mean, there were some early smartphones, but consumer smartphones wouldn't become a thing until two thousand and seven. So most people who are making a phone call were doing so when they were at home or they were at work, and they were using a landline anyway. Later on, companies would create telephone handsets that could connect to a PC network and make voipe calls, where you would have of what looked like a normal cordless telephone, but it would connect to your computer as opposed to your phone line. By combining VOPE services with peer to peer infrastructure, the group hit upon a phenomenon. You see. One of the challenges when you offer any service does not have to be VOIPD. It could be anything. One of the challenges that a lot of young companies face is scalability. So you might easily be able to handle demand in the early days of your product or service when very few people have access to it. But obviously you want your product to be a big success, right, Well, the challenge comes when demand starts to outpace your ability to meet that demand. If your servers can comfortably handle a few thousand users at once, but tens of thousands of people are trying to access it, you've got a problem. Scaling can be expensive, and often it can become more complicated than just throwing more resources at it. This is one of those big challenges that startups face to this day. It's also one of the big reasons for the dot com crash. There are lots of reasons for the dot com crash, but one of them was that there were a lot of companies that had a good idea, but it was way too expensive to scale it to a point where they could actually do what they were hoping to do beyond a small service group. Now, the beauty of peer to peer networks is that computers that join the network share their resources with one another, so you aren't reliant on a centralized server or even a collection of servers. The capacity to meet demand grows as the actual network grows. It sidesteps the scalability issue, and arguably this was the most genius aspect of Skype in those early days, so the founders called their solution Global Index or GI software. The core group built Skype on top of GI software, and they launch on August twenty ninth, two thousand and three. So we've just passed the twenty year anniversary of Skype this year. The name Skype actually came from a combination of the word sky and the phrase peer to peer. At least one online source I saw said that the name initially was going to be Skyper, but they ended up shortening it to Skype because there were some competing products some Internet domains that had Skyper as the domain, and they just wanted to avoid any issues with that, so they switched to Skype instead. As Skype launched, it was free to use, or initially it was Windows based. You would download a client and you could use Skype for free. There were no fees for long distance or international calls. For folks who lived in remote places but who still had internet service, it could be a big plus over traditional telephone service. The only limiting factor, at least initially, was that the person with whom you were trying to have a conversation also needed to have Skype installed. On their computer. Both parties needed Skype. If you had it and no one you knew had it, well it doesn't do you much good. So it was the kind of service that only has value as people adopt it. But once they did, it was easyps limon squeeze and the elegant solution of using peer to peer technology really paid off. As long as folks in your region had Skype installed, service was pretty darn good. The more people who adopted it, the better the service got, because again that meant that these computers were sharing resources. Got to remember that a lot of people just let their computers stay on all the time, and so it could run the Skype peer to peer software in the background even if someone wasn't actively using their computer, and so it could contribute to the service this way. The more folks who downloaded and installed it, the better it got. This was key to Skype's success as it was not the first VoIP product on the market right like it was almost a decade out from when Voipe first appeared, but other VoIP services followed the traditional client server infrastructure, so they had challenges with scaling the service up as adoption increased because the servers were running all the systems in the background, so if more people were using your service, you had to add more servers. The beauty of Skype was that it just got better as more people joined it. Now at this stage, the team referred to Skype as being in beta. For those of y'all who are not familiar with the term beta testing, it is a stage in development where the programmer or programmers who are responsible for this app or service or whatever, they roll it out to a test group and that test group use the app, and then they give feedback on it, and they also alert if they run into any bugs or anything. It's a way to make sure that the service is actually stable and useful, that the features make sense and everything before you roll it out to an even larger group of people. Skype would stay in beta for quite a bit, but it was an open beta, so really anyone could participate. They just had to download and install it, at least anyone on Windows machines. Initially, it would take a bit before Apple would get its own client for Skype. And that makes sense again that they had it as an open beta approach, because if it's a peer to peer network, it's only as good as the number of people who have joined on right, you don't want to limit that. If you had a closed beta for a peer to peer network, then you might not have the density of that network to make the service useful, and you also would have people who actually were interested in talking to each other. You'd have a bunch of individuals who were all part of a beta, but they didn't know each other, and they'd have no reason to talk to one another. That would not be a really successful approach. Now. One early beta build in two thousand and four added in the feature that would let PC users make Skype calls to landlines. The feature was called Skype out, and unlike the PC to PC calls, this one would actually cost money. So you can make a call from one PC to another for free, but if you were using your PC to call someone's landlined, you actually had to pay money for that. The initial fee I believe was two euro cents a minute for landlines that were within Europe, the US, Australia, and New Zealand, but these fees were typically lower, sometimes like significantly lower than the long distance and international call fees that telecommunications companies would charge you, so lots of people loved it. Lots of people started to use it. It was a way of sidestepping those incredibly expensive fees, and Skype's popularity grew as a result. This was also around the time that develop finally created an Apple computer compatible version of Skype. I say finally it was, you know, within a year of them launching. It wasn't that long. But still it shows a big difference too, right, because Apple in the early two thousands was starting to gain more momentum. But you have to remember that in the mid to late nineties, Apple was a very different company and it was on the verge of falling apart. By the early two thousands, it had started to mend that that reputation and was becoming well known for things like the iMac computer. So it was not a high priority because there was still a much larger concentration of Windows machines out in the world than Apple machines. But it's good to see that it took only like a year before the Apple version came out. Now, over the next two years, Skype would grow and with beta versions point nine point ninety seven one point zero to one point for rolling out to users. By January two thousand and five, Skype had boasted twenty three million registered users, and analysts began to i Skype as being a potentially disruptive product. Like we talk about disruption and tech a lot, typically we mean that some startup has come up with an idea that can upset the apple cart for an established industry. In this case, clearly Skype was a potential disruptor for the telecommunications industry. Skype's popularity grew in two thousand and five, helped in large part by the spread of broadband service, which was really becoming a thing by the mid two thousands. More folks were getting better access to the Internet and they weren't necessarily having to rely upon dial up modems to do it. And with that access came the potential to leverage technologies like VoIP, and by April Skype marked to milestone. It had one hundred million downloads. Now, keep in mind this is downloads, not registered users. Right at January they had twenty three million registered users. In April they have one hundred million downloads. But you know, you could have one person install Skype on multiple machines, you still have just one registered user doing that. So it's not in apples to apples comparison, but it was showing that. In two thousand and five, Skype was growing significantly. By August of two thousand and five, competition was starting to pop up, and again there had already been voipe services on the market, many offered by the telco companies that were attempting to guard their respective lunches out of fear of Skype gobbling them up. So Google launched its own VoIP service called Google Talk. Microsoft had acquired a company called Teleio that was in the VoIP business and was eyeing an opportunity to incorporate voipe features into Imson Messenger, and Skype, out of a effort of self preservation, aligned itself with Intel. They formed a partnership, and Intel made an investment into Skype. And then we get to it, the acquisition that makes the worst deals of all time lists. eBay made an offer that the Skype folks couldn't refuse. It was a two and a half billion dollar offer plus another half billion incentives for Skype. Guardian actually has it listed all the way up to three point one billion dollars when it was all said and done. I don't know where they got their math on that. Almost everyone else says either two and a half or two point six billion dollars. But the company known for online auctions and storefronts wanted to buy Skype for a truly princely sum, and that happened on September twelfth, two thousand and five. We're going to take another quick break. When we come back, we'll talk more about what happened in the wake of this massive deal. Okay, we're in the fall of two thousand and five. At that time, eBay's CEO was the serial executive leader, Meg Whitman. That name might sound familiar to you. Meg Whitman served as the head of several companies during pivotal moments in their respective histories, often with things being chaotic. Besides eBay, Meg Whitman was also the helm of Hewitt Packard during a pretty rough patch for that company's history. She also helmed Quibi. That was the short lived short form media company that came out the same year as we got a you know, global pandemic. Quibi launched and crashed in less than a year. So not like big bright things to cheer about in Meg Whitman's trophy case right there. But that's not to say that Whitman is or was a poor leader, but she is linked with some pretty questionable deals and the purchase of Skype is way up there. So at the time, Skype's revenue was in the low millions of dollars, which isn't bad, mind you, but it's hardly a powerhouse. However, the product's potential was enormous, you know. The chance to push traditional telephone companies aside and to become the dominant means with which people can communicate long distance was undeniably powerful. But there were skeptics who were questioning if eBay could even find a way to monetize the service effectively, or to integrate it into eBay itself, or preferably both. The one bit that seemed to make the most sense was that eBay also owned PayPal, and so the guess was that eBay would build in the ability for Skype users to leverage PayPal to pay for services like making calls to landline. And eBay also had a huge user base, so potentially that could mean a surge in Skype adoption. But beyond that, there was a big old question mark hovering over this deal. One thing that eBay was hoping for was to use the service to connect buyers and sellers so that they could talk with one another during things like an auction, but it turned out eBay users didn't have any desire to do that. With eBay's international scope, voice communication wasn't necessarily viable in the first place, just due to language barriers, and a lot of people preferred the anonymous approach of eBay, so speaking to someone else over a voice call would strip away at least some of that anonymity, so the company didn't actually see many folks adopt the service for the purpose that they were hoping for. Then there was the clash in corporate cultures. So eBay got its start as a plucky startup. When Meg Whitman joined the company, there were only thirty employees at e but by two thousand and five, eBay had grown into a much larger, more corporate company. Meanwhile, Skype had a more rebellious startup culture, so the two didn't really mix well, and there was a lot of overturn in Skype, the Skype division of eBay and the managerial side. Some of the founders would leave the company. At that point, Wheen of the Estonian developers decided to pack up and leave. Once the acquisition was complete, jolted the company that Freese and Zenstrom had founded. It continued to license the underlying peer to peer technology to eBay, which is a matter that would become important a few years further down the road. In December two thousand and five, Skype introduced a new major feature, video calling. Again, Skype wasn't the first company to or division in this case, to provide internet video calling. It wasn't even the first VoIP service to do that, but it would be a major feature that would open up new possibilities for users. Way back in the day, I actually used Skype to connect with podcast co hosts to create some silly shows that I haven't done in years. The Skype developers kept working on new features, even as the culture clashes meant that there were fairly frequent changes in you know, managers. By May of two thousand and six, Skype launched Skype Casts. This would allow a conference room of up to one hundred people, so you could like broadcast one to one hundred where it's kind of like a lecture, or you could have a huge meeting. Sort of the features that you would see later on in products like Zoom By October of two thousand and seven, eBay had to make a tough admission. The acquisition had not gone the way meg Whitman and her team had hoped it would. The goal was to integrate Skype into eBay and to build a monster of a revenue generator, but that just didn't pan out. So the company chose to take a nine hundred million dollar write down on this deal, and that essentially was eBay saying, yeah, we paid way too much for this, kind of like you know in an eBay auction where you get caught up in the excitement as you're bidding for that vintage Bart Simpson action figure and you end up spending like five times more than you had planned on. Not to bring up personal examples or anything. At this point, Zenstrom stepped down from Skype. He had stuck it out for two years under eBay leadership, but he felt it was ready to move on, and while Skype boasted more than two hundred and twenty million registered users, the usage rate just wasn't high enough to make it a big success for eBay at the time. In two thousand and eight, Meg Whitman left eBay. John Donahoe became the new CEO of the company, and the following year, in two thousand and nine, eBay announced a plan to spin off Skype and to hold its own initial public offering or IPOH. But now we get into that complication that I had mentioned earlier, because Zinstrom had left eBay right but Zinstrom still was in charge of the company Jolted, the company that created the peer to peer network that said it was licensing to Skype. So Zinstrum and Freeze still were very much active with Jolted, and they were arguing that Skype's technologies were completely dependent upon their products, and the decision to spin Skype off would not entirely be eBay's own because they didn't own the IP of that technology, and they threatened to pull that IP from Skype. So essentially they were saying, the foundational technology upon which Skype is built that belongs to us, and we will take it if we don't have a spot at this table. And this set off a massive legal kerfuffel, so by September two thousand and nine, eba Bay had to abandon any plans of spinning off Skype as its own company. Instead, the eBay chose to sell off a majority of its steak sixty five percent of its steak and Skype, and it would sell that to a group of investors including Mark Andresen. Jolted filed a lawsuit against eBay and argued that it should receive compensation for the continued use of Jolted technology, and it got very very messy, with people asking like, what is going to happen here? How is this deal going to unfold? By November two thousand and nine, the dust actually started to settle because eBay and Jolted came to an agreement. Jolted would drop its lawsuit against eBay and in return, Jolted would receive a fourteen percent steak in Skype. So the full pie for Skype by the end of all this mess looked something like this. Fifty six percent on worship of Skype went to a group of investors including Mark and Jason, who had been part of some massive Internet deals throughout the entire era of the Internet. Still as to this day, That's all I'll say about that, because I would need to do another episode to talk all about Mark and Json. Anyway, fourteen percent of Skype would go to Jolted. eBay would actually retain the final thirty percent, and this deal was like a two billion dollar deal as well. So while some people talk about the acquisition of Skype as one of the worst Internet deals of all time or worst deals of all time in the technology sector, I would argue that in the long term it probably wasn't that bad. It certainly wasn't as bad as like AOL Time Warner, for example. It didn't have as big an effect as that. And part of that is because while eBay paid way too much for Skype, the fact that they were able to recapture some of that by selling off some of the ownership to this group of investors and then retain thirty percent of it themselves meant that further down the line, they were able to kind of recoup their costs. So I don't think it was as bad a deal as a lot of people say. Anyway, a few more years went by, a couple more years, Skype continued to grow in popularity, and now we're up to twenty eleven and another huge deal is on the horizon. And I'm talking really huge because Skype had a new suitor. So eBay, like I said, had purchased the company for somewhere in the neighborhood of two point six billion dollars in two thousand and three, and it had sold off a portion of at stake for around two billion, And now a big, big company by the name of Microsoft had come calling, and Microsoft would make an offer on Skypeype that would put that two point six billion dollars well into the rear view mirror. It was a deal that again shook up the tech space, especially in tech journalism, because people were just thinking, like, we went through this in two thousand and three, now we're going through it again in twenty eleven for an even larger amount of money. And I'm dancing around it because in our next episode, we're going to talk more about what happened when Microsoft made the offer and ultimately acquired Skype, as well as some massive changes that would happen to the service as a result of this acquisition, including moving the service off of that peer to peer infrastructure that had been powering it since its founding. But that will wait until our next episod, where we'll talk more about what has happened to Skype in the year's following Microsoft's acquisition. In the meantime, I hope you are all well, and I'll talk to you again really soon. Tech Stuff is an iHeartRadio production. For more podcasts from iHeartRadio, visit the iHeartRadio app, Apple Podcasts, or wherever you listen to your favorite shows.