DONE DEAL: eBay Settles Skype Lawsuit, Founders Return

After a saga that simply defied explanation, the eBay/Skype lawsuit has finally been settled. The founders of Skype have returned to their creation.

A recap of the story: eBay bought Skype for $2.6 billion back in 2005. Skype’s founders, Niklas Zennstrom and Janus Friis, got off with a nice sum, but haven’t been satisfied with eBay’s handling of their baby. At the same time, eBay also neglected to buy a key piece of P2P technology that powers Skype – one still owned by the Skype founders (Joltid). This gave the founders leverage against eBay, and they used it, threatening to end the license that powered Skype’s P2P technology.

While this turmoil was occurring, eBay sold Skype to a group of investors. The Skype founders didn’t like this, either. The result? They filed a hefty lawsuit that threatened to unravel the deal and even threatened Skype itself.

The Settlement

Now that saga has come to a close. The New York Times reports that the pending lawsuit from Zennstrom and Friis (one that called for $75 million per day in damages) has been settled in a way that seems very favorable to the two co-founders.

Here’s the breakdown:

- Skype will still be sold and spun off as its own company, separate from eBay.

- eBay will won 30% of the new Skype, down from the original 35% it was going to won.

- Niklas Zennstrom and Janus Friis will combined own 14% of Skype. They will also each receive a seat on the Board of Directors. They paid $84 million for 4% of the company, with the other 10% being part of the settlement.

- Skype will now own Joltid, the key P2P technology in dispute and owned by the Skype founders.

- Index Ventures, which was part of the original deal, has completely dropped out.

We Can All Move On

While we don’t claim to be psychics, we actually predicted that this would happen back in April. As long as the founders owned Joltid, Skype was a ticking time bomb and no amount of wrangling would fix that until Skype took control of the Joltid technology.

Now with the Skype founders on board (and with a fair amount of control), Skype can move on as its own company. While the litigation of Friis and Zennstrom felt excessive at times, the end result is that they are back with their company, which we think is beneficial to the Skype’s future.

Now the deal has to officially close, but at this point it seems like a formality. We can start closing the book on this saga.

Tags: ebay, lawsuit, Skype