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Microsoft has agreed to buy the popular Internet telephone service Skype for $8.5 billion in the biggest deal in the software maker’s 36-year history. There was speculation about an impending deal Monday.

Chris O’Brien writes: The San Francisco-Twitter deal on its own makes rational economic sense. It keeps a fast-growing and high-profile company in San Francisco, one that promises to move to a part of the city that needs an economic jolt, while having no immediate impact on the city’s budget. But it has opened a Pandora’s box.

Google I/O starts today. Part of the thrill for software developers is just being here at what will be the global center of all things Googley for the next two days.