Today: Microsoft lands Skype in an $8.5 billion deal that could be good for Facebook. Plus: Google (GOOG) launches its own cloud-based music service. And: Apple (AAPL), more Google, Zynga, Lady Gaga (yes, really), Funzio and Silicon Valley tech stocks.
Microsoft lands Skype
Microsoft — the Redmond, Wash., software megabehemoth — today announced its biggest acquisition ever: It intends to buy Skype — the Internet telephone service once owned by eBay (EBAY) — for $8.5 billion.
“Skype is a phenomenal service that is loved by millions of people around the world,” Microsoft CEO Steve Ballmer said in a statement announcing the deal. “Together we will create the future of real-time communications so people can easily stay connected to family, friends, clients and colleagues anywhere in the world.”
Microsoft intends to maintain Skype as an independent business unit, with Skype CEO Tony Bates becoming president of the new Microsoft Skype Division. “Together, we will be able to accelerate Skype’s plans to extend our global community and introduce new ways for everyone to communicate and collaborate,” Bates said.
The acquisition returns Skype — founded in 2003 by Niklas Zennstrom and Janus Friss based on peer-to-peer technology created for their Kazaa music downloading service — to ownership by a corporate tech giant. San Jose online auction powerhouse eBay, you might recall, bought Skype in 2005 for $3.1 billion; eBay later said that it paid too much in that deal.
By 2009, though, eBay sold a controlling stake in Skype — in a deal worth about $2 billion — to investors including two Silicon Valley venture capital firms, Silver Lake Partners and Andreessen Horowitz, as well as the Canada Pension Plan Investment Board.
“Today, I tip my hat to an old rival, Microsoft,” Andreessen Horowitz partner Ben Horowitz wrote on his blog. “By acquiring Skype, Microsoft becomes a much stronger player in mobile and the clear market leader in Internet voice and video communications. More importantly, Microsoft gets a team, ably lead by the exceptional Tony Bates, that can compete with anyone.”
On the GigaOm blog, Om Malik suggested the deal could be good for Palo Alto social networking powerhouse Facebook. “With Microsoft,” Malik wrote, Facebook “gets the best of both worlds: It gets access to Skype assets (Microsoft is an investor in Facebook) and it gets to keep Skype away from Google.”
Microsoft stock, by the way, finished regular trading today at $25.67, down 16 cents, or 0.6 percent, from Monday’s closing price. Meanwhile, eBay shares climbed 81 cents, or 2.4 percent, to close at $33.93.
Your music, Google’s cloud
Mountain View Internet juggernaut Google today revealed that it’s launching its own cloud-based music service.
According to a post on the company’s official blog, Music Beta by Google “lets you upload your personal music collection to the cloud for streaming to your computer and Android devices.”
“With the new service, your music and playlists are automatically kept in sync, so if you create a new playlist on your phone, it’s instantly available on your computer or tablet,” Android product management director Hugo Barra wrote in the post.
Yes, this means that (for now, at least) Google won’t actually be selling music like Apple does with iTunes.
According to a Merc report, Google launched the cloud music service at its yearly Google I/O developers conference. It will be free for now and allow users to upload as many as 20,000 songs. Google is accepting invitation requests at http://music.google.com/about/.
Google’s Android army: Barra’s post also noted that Google is working on a new version of its Android operating system code-named “Ice Cream Sandwich.” “Our goal with Ice Cream Sandwich is to deliver one operating system that works everywhere, regardless of device,” Barra wrote.
In particular, Ice Cream Sandwich will bring features developed for Honeycomb — the version of Android designed for tablets — to phones in Google’s Android army.
Android, iPhone location tracking
Apple and Google executives are being questioned in our nation’s capital today by a Senate panel about the location-tracking capabilities of the iPhone and devices running Google’s Android software.
According to The Associated Press, Apple’s Guy Tribble and Google’s Alan Davidson both told the senators that their companies give consumers control over the use of location information.
Sen. Al Franken, D-Minn. chairman of the Senate Judiciary Subcommittee on Privacy, Technology and the Law, said he was concerned about the possibility of location data falling into the wrong hands.
“I think that’s something the American people should be aware of,” Franken said, according to AP. “I just want to be clear that the answer to this problem is not ending location-based services. No one up here wants to stop Apple or Google from producing their products.”
Social games update
Zynga: Lady Gaga has found a new landing spot for her pop empire: She’s setting up a “GagaVille” in “FarmVille,” the popular title from San Francisco online social gaming upstart Zynga.
According to our friends at AP, “GagaVille” will be the first place where fans can hear songs from Lady Gaga’s new “Born This Way” album.
Funzio: The San Francisco games upstart led by co-founder and Ceo Ken Chiu — a former general manager at Zynga — has won $20 million in venture funding in a round led by IDG Ventures.
Funzio’s “Crime City” game was launched in September.
Silicon Valley tech stocks
Up: Apple, Oracle (ORCL), Google, Intel (INTC), Cisco Systems (CSCO), Hewlett-Packard (HPQ), eBay.
Down: VMware, Gilead Sciences (GILD), Yahoo (YHOO).
The tech-heavy Nasdaq composite index: Up 28.64, or 1 percent, to 2,871.89.
The blue chip Dow Jones industrial average: Up 75.68, or 0.6 percent, to 12,760.36.
And the widely watched Standard & Poor’s 500 index: Up 10.87, or 0.8 percent, to 1,357.16.
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Frank Russell at 408-920-5876. Follow him at Twitter.com/mercspike.
