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Report: eBay is building a Frankenskype

Auction company wants to spin off the telephony service it bought over four years ago, but rights to some of its software remain with the company's founders. So eBay's trying to build a new one.

Caroline McCarthy Former Staff writer, CNET News
Caroline McCarthy, a CNET News staff writer, is a downtown Manhattanite happily addicted to social-media tools and restaurant blogs. Her pre-CNET resume includes interning at an IT security firm and brewing cappuccinos.
Caroline McCarthy
2 min read

eBay wants to spin off telephony service Skype into a separate publicly traded company, but something's standing in the way: Skype's founders are threatening to take back some of the technology amid a licensing dispute.

The auction giant's solution, according to a Bloomberg report on Thursday: build a new one.

This was revealed in a 10-Q regulatory filing with the Securities and Exchange Commission; eBay is not commenting beyond the filing. You can decide whether "Frankenskype" or "Skypenstein" is a better name for the hypothetical creation.

Here's what has happened: Skype's founders have established a company called Joltid Ltd., which still owns the rights to some of Skype's technology. Joltid has made the accusation that eBay doesn't have the right to do everything it wants with all of Skype's code as a result; eBay is suing Joltid to get that technology back. (Is this like the Silicon Valley equivalent of body-snatching?) But the catch is that the trial isn't scheduled until next June, which could put a big roadblock in the way of eBay's plans for a Skype IPO.

So that's why eBay is working on a total rebuild of Skype's software.

There is, however, this little issue. "The new software will be expensive and might not work," Bloomberg's article summarized. "The company said it might have to shut down Skype if the dispute with the founders isn't resolved."

eBay purchased Skype in 2005 for $2.6 billion, but it hasn't proven to be the best fit for the company. Rumors circulated that it was looking to sell Skype, possibly to Google, but then opted to take the company public instead.

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