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eBay CEO says not sorry company bought (and sold) Skype

At D: All Things Digital, John Donahoe says the company needs to take risks and defends decision to acquire and then divest the Web-based calling company.

Walt Mossberg (left) and eBay CEO John Donahoe (right) speak at D8. Asa Mathat/All Things Digital

RANCHO PALOS VERDES, Calif.--eBay chief executive John Donahoe on Wednesday defended both the decision to buy Skype as well as the company's later move to sell most of its stake in the Web telephony firm.

"It was an acquisition I'm not sorry we made," Donahoe said at the D: All Things Digital conference. "Taking risk is one of the things you have to do in an uncertain Internet (environment)."

eBay, he said, thought Skype could reduce friction by connecting buyers and sellers more directly. "It turns out Skype is a fantastic way to connect people," he said, but not a particularly useful tool for buyers and sellers.

Turning to the businesses eBay hasn't sold, Donahoe said that people won't use their wallets in three years' time, choosing to pay by credit card, checking account, or other means--but using their phone rather than plastic or paper.

"PayPal will be the digital wallet inside your mobile device," he said. Later in the talk, Donahoe talked about the ability to use PayPal as a micropayment for media providers by the fall. "PayPal's take rate for that will be less than 5 percent," he said. "That's less than most digital payment alternatives."

One audience member criticized Donahoe, saying that eBay has been nickle and diming customers to death. Donahoe said that may have been a fair criticism in the past but that the company has moved to simplify things over the last 18 months. "We raised fees too many times," he acknowledged.

Moving on to another issue entirely, Donahoe also said he won't follow his predecessor into politics.

"I am never going to run for office, but I hope Meg Whitman becomes governor (of California)," he said.

On the eBay side, Donahoe said that the company competes with Amazon,, and smaller online sites like Etsy, but insists it won't be a winner-take-all battle in e-commerce.

eBay's strength is finding things that aren't available elsewhere, he said, such as a new version of last year's cell phone.

Asked about the iPad, Donahoe, like previous D panelists, praised the Apple tablet.

"I think its going to be the best eBay experience," he said. "More devices are going to be a part of the shopping experience," he said.

The traditional Web-browsing experience, Donahoe said, has improved but is still far short of where it should be, he said, suggesting what was a "2" is probably more like a "4" on a scale of 1 to 10.

"There's still a long way to go," he said.