Microsoft finalizes $8.5 billion Skype deal

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Microsoft has formally closed its $8.5 billion acquisition of Skype today, giving the software giant a major foothold in the growing market for Internet telephony services. Starting today Skype will become a new business unit within Microsoft, with Skype CEO Tony Bates heading the division and reporting directly to Microsoft CEO Steve Ballmer.

"This represents a huge leap forward in Skype’s mission to be the communications choice for a billion people every day," said Bates in a post at the official Microsoft blog. "Joining forces with Microsoft is the best way to accelerate this mission and capitalize on our position at the intersection of social, mobile and video communications."

The Skype division will continue to offer its current products to millions of users globally and across multiple platforms, including those of its rivals such as Apple's Mac OS X, iOS, and Google's Android. In other words, it will be business as usual for now, but down the line Skype will be integrated into a variety of Microsoft products. The company has said it plans to integrate Skype across numerous consumer products such as the Xbox 360 and Windows Phone devices.

It's been a long road for Skype, founded back in 2003, which was first acquired by eBay in 2005 for $2.6 billion in what's considered a failed experiment to have buyers and sellers communicate via voice calls on the auction site. The latter gave up on Skype in 2009, selling a 70% stake to a group of technology investors. Despite their huge user base and household name in the world of communications, Skype was still on its way to becoming profitable, but with eBay and partners anxious about the delayed initial public offering they had been pushing for a sale of the company.

It remains to be seen if the next phase of Skype's life as part of Microsoft proves a better fit than its former owner. The transaction is still under antitrust review in some countries, but U.S. and European Union regulators have already given Microsoft and Skype their blessings.

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