Case Categories

Mergers, Acquisitions and Takeovers Case Study

Case Title:

eBay's Takeover of Skype : The Strategic Fit

Publication Year : 2005

Authors: Nusrat Jahan Maldar, Sumit Kumar Chaudhuri

Industry: Internet and e-commerce


Case Code: MAA0021

Teaching Note: Available

Structured Assignment: Available

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Niklas Zennstrom and Janus Friis emerged from obscurity and became Internet legends after creating KaZaA, an illegal on-line file-sharing programme. After selling KaZaA, Zennstrom and Friis, embarked on their next project, an Internet telephony programme called Skype. Unlike KaZaA, Skype was legal, but as KaZaA had rattled the music industry, Skype's revolutionary business model was expected to threaten the traditional models of the giant telecom companies. Internet heavyweights, Microsoft, Yahoo! and Google, were said to be negotiating with Zennstrom and Friis to acquire Skype. On September 12 th 2005, eBay acquired Skype for $2.6 billion.

Pedagogical Objectives:

  • To highlight the evolution of Skype and its acquisition by eBay
  • To discuss the potential synergies that eBay might gain from the acquisition and the problems it might encounter in the course of a successful integration with Skype.

Keywords : Mergers,Acquisitions,Alliances Case Study;Niklas Zennstrom; Janus Friis; KaZaA; Skype; Low cost business model; eBay; PayPal wallet; Strategic fit; Competitive advantage; Competition; Synergies; Copyrights; Lead generation; Word of mouth marketing; On-line file sharing

Contents : 
From KaZaA to Skype
Niklas Zennström and Janus Friis
eBay’s Acquisition of Skype: The Strategic Fit
Skype’s Worldwide Subscribers
eBay’s Growth Timeline

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