Facebook taps Skype for video chat

Editor's note: We used Cover It Live for this event, so if you missed the live blog, you can still replay it in the embedded component at the end of this post. Replaying the event will give you all the live updates along with commentary from our readers and CNET reporters. For those of you who just want the basic updates, we've posted an edited transcript below. You can also read our stories about the partnership between Facebook and Skype and Facebook introducing group chats.

Update 10:28 a.m. PT: The social network has tapped Skype for video chat. The partnership will also enable users to import their news feed, send instant messages, comment, and "like" all within Skype.

Facebook is holding another one of its news briefings Wednesday and we'll there to bring you the news, live from the company's Palo Alto, Calif., headquarters.

So far there have been murmurs of the company cooking up a number of products, from tablet apps, to new photo-sharing and music-listening services. More recently there's even been talk of video chat service powered by Skype, which Microsoft (a Facebook investor) recently paid $8.5 billion for in a deal back in May.

Co-founder and CEO Mark Zuckerberg told Reuters last week that the company was planning to "launch something awesome" at the event. Whatever it is comes from a 40-person development group from the company's offices in downtown Seattle.

As usual, we'll be using Cover it Live to bring you updates and photos from the event. The event starts at 10 a.m. PT.

Transcript of live blog starts here:

10:14 a.m. PT (Josh Lowensohn): And we're starting everyone. Zuckerberg up @ the podium.

10:15 a.m. PT (Josh Lowensohn): "Thanks for coming out today," Zuckerberg says. "We've been busy building stuff for the past six months or so." Today is the start of "launching season." Zuckerberg now sharing a story about his neighbor telling him, "I heard you guys are launching something on the radio today! I hope it's video chat! I want to video chat with my grandson!"

10:17 a.m. PT (Josh Lowensohn): Zuckerberg says social networking is at "an inflection point" right now. So far it's been about connecting people. "There's this new way that people are staying connected," or "look how many people are being connected."

Until the last couple years, people had questions about whether it would be widespread, Zuckerberg says. "I think that chapter is more or less done at this point."

10:17 a.m. PT (Rafe Needleman) : Skype just confirmed: https://twitter.com/#!/Skype/status/88656651430801408

10:17 a.m. PT (Josh Lowensohn): "There's this clear arc, where the world generally believes it is going to be everywhere," and that it's only a matter of time before it's in the billions.

10:18 a.m. PT (Josh Lowensohn): Now we're seeing a screen capture of all the social connections around the world (lots of threads between countries).

Zuckerberg says the trend in the next 5 years is not about the number of connections, but what you can build on top of it.

10:19-10:20 a.m. PT (Rafe Needleman) : Microsoft now owns Skype, as well as a small piece (1.6%) of Facebook. Although I doubt that Microsoft has much to do with this deal. Correction: MS still awaiting approval on Skype buy

10:20 a.m. PT (Josh Lowensohn): Zuckerberg says companies that are best in class with games, music, communications, search want to know how to introduce social bits to their products. "That's some of what we have to talk about today," Zuckerberg says.

But how to measure? If last few years have been about user growth and active users. The next five years is not going to be about that metric. Zuckerberg says you measure it by amount of value people are getting, time spent, number of apps, driving the economy. "We see a version of that with sharing on Facebook as well."

10:21-10:23 a.m. PT (Josh Lowensohn): Zuckerberg says the rate of people sharing has gone way, way up. Growing at an exponential rate.

Amount of stuff they share is about twice of what they'd be sharing a year ago. That trend is expected to keep doubling for the next two years.

Zuckerberg notes that people are bad at understanding exponential growth. Using an example of folding a piece of paper on itself 50 times. It goes to the moon and back more than 10 times. "It's a small base, doubling many times."

750 million users confirmed, Zuckerberg says was not reported because the company doesn't think that's a metric worth tracking.

10:23-10:24 a.m. PT (Rafe Needleman) : Skype will be a client for Facebook. Will be able to view Facebook stream in Skype in 5.3. In 5.5, now in open beta, you can send chat messages to Facebook users. I'm only partially paying attention to Zuck's math lesson.

10:24-10:25 a.m. PT (Josh Lowensohn): More impressive, Zuckerberg says, is the ramp up in sharing per user. Now showing us a fancy "log normalized" graph demoing Moore's Law, with processor speeds going up year by year. There's a connection here, Zuckerberg says. Sharing has hit similar growth milestones with features like profiles, photos, newsfeed, platform apps, comment likes, the like button, groups and messages.

10:25 a.m. PT (Rafe Needleman) : It looks like Facebook/Skype integration is Windows only today. I'm on a Mac at the moment and can't find download links. If you're on Windows, though, give it a spin here: http://www.skype.com/intl/en-us/features/allfeatures/facebook/

10:26 a.m. PT (Josh Lowensohn): Originally people were sharing about .1 things per day in 2004, with it growing with photos, followed by status updates on the news feed.

TL;DR here: We add more stuff and you share more stuff.

Zuckerberg says we're "at the elbow of the curve." Whatever gets built from here on out are going to make that sharing growth exponential, he says.

10:27 a.m. PT (Josh Lowensohn): Zuckerberg says 4 billion things are shared every day. "The stuff we're going to share today doesn't even fit into that 4 billion," Zuckerberg says. Today we're hearing about private communication. That's group chat, a new chat design, and video calling.

10:28 a.m. PT (Rafe Needleman) : Three new things today:
* group chat
* new design
* video calling

10:28 a.m. PT (Josh Lowensohn): Zuckerberg says most users just accept friend requests vs. sending them out. Groups has helped out with that, with people not having to do much of the leg work. "We just want to make it so you can do ad-hoc chat as well." It's something a lot of people have asked for, Zuckerberg says.

10:30 a.m. PT (Josh Lowensohn): Zuckerberg says that if people have the wide-screen width to see a buddy list, and Facebook on the same screen, that's the way to go.

Video calling, "we're doing this with Skype," Zuckerberg says. It's "symbolic" of how the company is going to do things from here on out, he says.

10:30 a.m. PT (Rafe Needleman) : So, a correction, you don't need Skype, apparently, to do video chat. Can do it from the Facebook site itself via a small plug-in.

10:30 a.m. PT (Josh Lowensohn): Plug-in for the video chat tech takes about 10-20 seconds to download, Zuckerberg says. A demo is coming up shortly.

10:30 a.m. PT (Rafe Needleman) : Again the in-Facebook link for video calling is: https://www.facebook.com/videocalling

10:31-10:33 a.m. PT (Josh Lowensohn): "We're using the best technology that's out there for video chat, with the best social infrastructure that's out there," Zuckerberg says.

Zuckerberg says the approach of partnering with "best in class" companies ends up with a better product, and that it's a different approach from companies that try to build everything in-house.

Facebook is the infrastructure, enabling people to build cool software on top of it, Zuckerberg says.

Peter, group chat's product manager up now. He says 50 percent are actively using groups. Says that people needed an easier way to start those conversations with ad-hoc groups.

10:33 a.m. PT (Rafe Needleman) : Peter from Facebook is equating high use numbers with "people love it." Very Jobsian.

10:34 a.m. PT (Josh Lowensohn): The example there is one-click options to add friends to chat without having to make a group. If they're online they see it right away. If they're offline, they get a summary later on. That's coming out today.

Also new: a redesign of the chat design. Before it's been out of the way (on the left). Now it will sit on the right-hand side of the page, similar to a big buddy list. The people you message the most show up there.

10:35 a.m. PT (Josh Lowensohn): The chat window itself has also been tweaked to add a little video button, akin to Google Talk.

Now we're getting a demo from Phillip, an engineer from the company's Seattle office, who's going to give us a demo of video calling.

10:35 a.m. PT (Rafe Needleman) : Group Chat is like Google+ Hangout in text, I guess. (Hangout also has a chat window.)

10:36-10:37 a.m. PT (Josh Lowensohn): If your friend is online, you can start a video call. It connects immediately, and hovers on top of the profile in a slick little lightbox. Demo time...

Demo starting out from a text chat. Phillip hits the video chat button, and it connects (complete with a "Facebook + Skype" logo).

To the depths of the Seattle office.

10:38-10:39 a.m. PT (Josh Lowensohn): Phillip says we should focus on "how did that feel?" Connecting to someone else right from the page with no technical knowledge, no new accounts. "This is by far the easiest way to get connected with video."

The big hurdle, Phillip says, is the download. First time use gets a little "do you want to download this?" pop-up, followed by a Java applet. 20 seconds later you have it installed, and are two clicks away from video chat.

Tony Bates, CEO of Skype, up on stage now to talk about the partnership.

10:40 a.m. PT (Josh Lowensohn): "Really gratifying to see the product, and to have this available on the leading social network out there," Bates says.

Bates says the company is averaging 300 million minutes of video a month, and 50 percent of all traffic is video calling.

10:42 a.m. PT (Rafe Needleman) : Video calling is now table stakes for social products. Google+'s GROUP video chat is a big step forward.

10:42 a.m. PT (Josh Lowensohn): Bates says partnership started with taking feeds, contacts and integrating IM. "Technology itself is tough," Bates says. It's not at a billion yet, but it will be eventually, he notes.

Bates says paid components will make their way into it. (Think Skype Out here.)

10:43-10:44 a.m. PT (Josh Lowensohn): Zuckerberg back up now, says he's wrapping it up, then on to Q&A. To wrap, group chat, a new design of the chat sidebar, and video calling powered by Skype.

Zuckerberg says we're going to see a lot more of these things in the next few months and years. Some of it will be big companies like Skype, and others will be people building on top of the company's platform. Now onto Q&A...

10:45 a.m. PT (Josh Lowensohn): Q (via Ben Parr of Mashable): Is group video chat in the future? What do you think of Google hangouts?

A: (Zuckerberg) Today we're doing 1 on 1. We've been working on Skype before Bates was there. Now Skype is a part of Microsoft, and we have a longstanding relationship with Microsoft. I wouldn't rule anything out. I also wouldn't undersell the value of what we have today. The vast majority of video chat out there is 1 on 1.

10:47 a.m. PT (Josh Lowensohn): Bates says the 1 on 1 bit is an awesome start, and we'll continue to build exciting things.

Zuckerberg says on Google +: We've all only spent a little bit of time on the service. The last 5 years have been about connecting people, and the next 5 years are about connecting the apps. What you're going to see is people building social networking into their apps. Netflix is a good example of wanting to build social stuff. Now that there's social infrastructure out there, people are going to do that. There's going to be a hybrid, with some people building their own. I view this as validation of how this is going to play out over the next 5 years.

10:49 a.m. PT (Josh Lowensohn): Q: Do you worry about people skipping direct Skype integration from an app?
A: Bates: No. We set a goal of hitting over a billion, and this can get us there. We want to be ubiquitous.

Q: Larry Magid of CBS: How do we accept a video chat request? Can it be unintentional?
A: Zuckerberg: You have to accept it. You will get a ring as if your phone (or computer) is ringing. Box gives you accept, or click out option. The camera doesn't turn on until you accept it.

10:51 a.m. PT (Josh Lowensohn): Q: CNBC: What's in it for Skype financially? You guys get most of your money with Skype Out. I don't see how this leads to that.
A: Bates: We are talking about futures. I did mention paid products, but today is all about reach.

Q: Rafe (of CNET): Can you talk about these features with mobile features? (Tablets and smartphones)
A: Zuckerberg: Video calling is not live for mobile (yet), chat redesign for mobile doesn't have wide screens (yet), and group chat works. One of the things that's unique about our messaging, is that when you send a message, the interface is the same as your mailbox. Most of these are Web features?

Q: When video on mobile?
A: Zuckerberg: We'll start working on it tomorrow.

10:53 a.m. PT (Josh Lowensohn): Q: What does Facebook do to handle the data load?
A: Zuckerberg: We're on the trend now where we're probably going to be building more of our own vs. leasing. One of the innovations of Skype is that it's all peer to peer (P2P). That part of the app is built by Skype. The reason it's so built up is that they had a way of building video chat that's low bandwidth.

Q: Rich from Bloomberg: What's the overlap of Facebook and Skype users?
A: Bates: We don't necessarily track those numbers.

10:53 a.m. PT (Josh Lowensohn): Q (from AFP): Is there any revenue sharing? What about the Microsoft relationship here?
A: Zuckerberg: There are no economic terms here, it's the free service. But we're in the process of finding out what to do next. We took a turn to do this inside Facbook, and we've already got a rollout of features we want to add. We'll figure that out, Zuckerberg says.

Re: Microsoft, Zuckerberg says we've got a great relationship. Now that Skype's owned by Microsoft, there's a sense of stability, Zuckerberg says. Bates points out that the deal with Microsoft has not closed yet.

Zuckerberg: We have everything that we wanted to do in line before the Skype acquisition.

10:57 a.m. PT (Josh Lowensohn): Q: (via Altimeter group): What's happening with group and friend management over time with all this sharing?
A: Zuckerberg: If this doubling keeps happening 10 years from now, they'll be sharing 1024 times as many things as they are now. There are a few ways that can play out:
1) Proliferation of apps. More social experiences are going to happen.
2) Mobile. Instead of doing this with a computer, you'll be able to do it on mobile devices.
3) Social norms, the sociology behind how sharing develops.

10:58-10:59 a.m. PT (Josh Lowensohn): Zuckerberg: Even just accepting friends, a huge majority of users will only get involved in the system when enough of the people have asked them to be friends that they get sucked in.

Zuckerberg: The trend of these small groups being the thing that's driving the sharing is not where things are going.

And that's a wrap. Thanks for joining us everyone.

Editors' note: The original, barebones version of this story was posted July 5 at 11:38 a.m. PT.