Microsoft closes $8.5 billion Skype acquisition

The new Skype Division expects Microsoft ownership will speed up its attempt to sign up a billion customers.

Microsoft has completed its $8.5 billion acquisition of Skype Global, giving the software company a major foothold in the growing market for Internet telephony services.

"Skype is a phenomenal product and brand that is loved by hundreds of millions of people around the world," Microsoft CEO Steve Ballmer said in a statement late last night. "We look forward to working with the Skype team to create new ways for people to stay connected to family, friends, clients and colleagues--anytime, anywhere."

Microsoft announced in May the deal to acquire Skype. A final hurdle was cleared last week when European regulators approved the deal.

Skype's voice over Internet Protocol (VoIP) services let people hold free video and voice calls over the Internet; Skype charges a fee for "SkypeOut," which lets Skype users dial ordinary phone numbers, and "SkypeIn, which lets people dial an ordinary phone number that actually connects through to a Skype account online. Both services are useful for bypassing steep international calling rates using conventional telephone service.

In July, Skype had 65 million daily users, the company said last month. Collectively, they spent 700 million minutes a day on Skype audio calls, 300 million minutes a day on Skype video calls, and 30 million minutes a day on calls with ordinary phones.

Skype CEO Tony Bates now is president of Microsoft's Skype Division.

Skype products will be integrated into Microsoft products, but they'll continue to be offered where they are today, Microsoft said. Skype apps are available for iOS and Android, which compete with Windows Phone, and on Mac OS and Linux, which compete with Windows.

Bates expects Skype growth to increase under Microsoft.

"Together, we will be able to accelerate Skype's goal to reach 1 billion users daily," Bates said in a statement.

Skype was founded in 2003, and eBay acquired it in 2005. An investor group led by Silver Lake Partners bought it in 2009. Skype also has an important partnership with Facebook that could help each company compete better with rival online services such as Google+ "hangouts," Yahoo Messenger, and Gmail Chat.