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Microsoft's Purchase of Skype Approved by FTC

Microsoft's proposed $8.5 billion purchase of Skype was approved on Friday, according to the U.S. Federal Trade Commission. Under the current process, the FTC's "early termination" notice includes the approval of the U.S. Department of Justice. Now the deal faces international regulatory scrutiny before it can proceed.

Luxembourg-based Skype provides IP-based voice and video services enabled through computers, with most subscribers using its free services rather than its premium offerings. Under the terms of the deal announced on May 10, Microsoft plans to run Skype as a division of Microsoft, headed by current Skype CEO Tony Bates. Skype's technologies may be rolled into certain Microsoft products, such as Outlook, Xbox, Kinect, Messenger, Hotmail and Lync, according to comments made last month by Microsoft CEO Steve Ballmer.

Skype has claimed it had "an average of 145 million connected users per month" in the fourth quarter of last year. Skype's ownership is led by Menlo Park, Calif.-based Silver Lake investment partners. Other owners include eBay Inc., Joltid Ltd. and Skype's founders, Niklas Zennström and Janus Friis, the Canada Pension Plan Investment Board and Andreessen Horowitz, according to Skype's description.

Skype's management terminated the employment of about eight executives before the merger, as noted by the independent Skype Journal blog here. The reasons for the job cuts aren't clear, but the Journal speculated that Tony Bates wants to hand pick the team or that Microsoft has its own team in place.

A Bloomberg article posits another possibility for the executive dismissals, with a source speculating that the cuts will lower Skype's stock option price should someone want to buy them. Silver Lake floated a list of executives to cut, according to the Bloomberg article. The investment company may hold about 70 percent of Skype, which is what it purchased from EBay in 2009.

One of the terminated Skype execs was David Gurle, who formerly served as vice president of the company. Previous to joining Skype, Gurle had founded Microsoft's Real Time Communications business group, according to a Skype bio.

About the Author

Kurt Mackie is senior news producer for 1105 Media's Converge360 group.

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