Web Auction House Says Deal Would Improve Online Trading

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SAN FRANCISCO (AdAge.com) -- In a move some analysts believe could radically alter the trillion-dollar telecommunications business, eBay today bought Internet communications company Skype Technologies for $2.6 billion.

The online auction house said the move will allow buyers and sellers to more easily communicate with each other and lead to higher prices and a higher number of completed deals.

Free computer-to-computer calls
Skype, founded two years ago in Europe and based in Luxembourg, allows computer users to make free computer-to-computer calls over the Internet using VoIP (voice over Internet protocol) technology. For about two cents a minute, Skype users can also connect with standard phones. Skype claims to have more than 54 million registered users and that it is signing up 150,000 new users a day.

In announcing the deal, eBay also said the acquisition will create "new lines of business" and "significant new monetization opportunities." EBay said in addition to its current transaction-based fees, e-commerce communications could be monetized on a pay-per-call basis through Skype, which would open new e-commerce categories "especially for those sectors that depend on a lead-generation model, such as personal and business services, travel, new cars and real estate.”

Along with PayPal
Meg Whitman, eBay's president-CEO, said the acquisition, along with eBay's partner online-payment service PayPal, will "create an extraordinarily powerful environment for business on the Net" and help to expand sales to emerging e-commerce markets such as China, India and Russia.

Jeff Pulver, chairman of Pulvermedia, which tracks the Internet communications industry, said the deal "turns the entire telecom industry picture on its head, and demonstrates that voice, presence, text messaging and other IP-based applications will be essential for the company of the future."

He said that eBay is a community-based company like Skype, which is built on peer-to-peer networking. But, he added, "frankly, I can see a more dramatic impact on Sotheby's and the Antiques Road Show."

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