Licence row puts Skype under shutdown threat

BANGALORE, INDIA: Skype, the eBay company which offers Internet telephony service, is reportedly on the verge of shutdown due to an ongoing legal battle with its founders.

Recently eBay had said it did not own the underlying technology that powers the service, prompting fears of a shutdown. Though Skype is trying to develop new peer-to-peer technology to replace the code it currently uses, how far would it be successful is still doubtful.

“Skype’s business as currently conducted would likely not be possible,” eBay said in a filing with the US Securities and Exchange Commission (SEC).

The filing also said the new software development would be expensive, possibly unsuccessful, and "may result in loss of functionality or customers, even if successful".

If they fail in that attempt, millions of Internet users who use Skype could be forced to find other ways to make phone calls.

Internet auction company eBay had paid around $3.1billion for the telephone service between 2005 and 2007 and is now locked in a legal battle with the technology's owner, Joltid, a company owned by Skype's founders.

The purchase did not include the peer-to-peer technology that is at the heart of Skype's functionality.

The legal dispute resulted in Skype filing a claim against Joltid in the English high court in March, said a media report. In response, Joltid filed a countersuit, saying Skype had no right to use or modify certain code and that it had breached the license agreement, and said it was terminating the agreement as a result. The case would come for hearing in June 2010.

However, Skype refused to divulge any further information other than the ones included in the SEC filing.

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