Microsoft Buys Skype for $8.5 Billion

Microsoft announced this morning that it will buy the Internet phone company Skype for $8.5 billion, with current Skype CEO Tony Bates continuing to run Skype as a business unit within Microsoft reporting to Microsoft CEO Steve Ballmer. The Wall Street Journal first reported on Monday night that a deal was near and All Things Digital confirmed the report, following GigaOM's scoop that Skype may have been talking to Microsoft in addition to Google and Facebook.

Overnight coverage suggests discussion of the deal will go in several different directions as the day progresses. First, there's the question of the price tag. Erick Schonfeld at TechCrunch, for example, thinks Microsoft, "desperate for a legitimate Internet business beyond Bing," is overpaying for a company that "still hasn't figured out how to turn 663 million users into a profit machine."

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