Column: eBay tries a Hail Mary

Here’s a column I posted at globeandmail.com about the eBay takeover of Skype:

“There’s only one real question that springs to mind in the wake of eBay’s takeover bid for voice-over-Internet provider Skype — which could cost the on-line auction company up to $4-billion (U.S.) — and it is this: Is the dot-com bubble back, or has eBay chief executive officer Meg Whitman lost her mind?

As is typical with such deals, there was plenty of talk on Monday about the “synergies” between the auction provider and the VoIP company started by Swedish entrepreneur Niklas Zennstrom — who also co-founded the notorious Kazaa file-sharing network. Ms. Whitman, for example, talked about “leveraging” Skype’s software and services along with eBay’s on-line payment service PayPal to create an “unparalleled e-commerce engine.”

Even if you agree that there are synergies between the two companies, however — and that takes a little thinking outside the box, not to mention a few leaps of faith — $4.1-billion is a lot of cash to pay for benefits that remain purely theoretical. Does eBay have so much money that it can afford to bet $4-billion on a company that has less than $100-million in revenue and no profits? Or is it so desperate for growth, and so afraid of losing ground to competitors such as Google, Yahoo and Microsoft, that it is willing to mortgage its future on such a deal? Continue reading

Column: Is it Skype or hype?

Here’s a column I posted to globeandmail.com about the speculation that Skype will be bought:

“First it was Yahoo. Then it was Microsoft. Then it was Rupert Murdoch’s media conglomerate News Corp. Now eBay is supposedly in talks to take over Skype, the voice-over-Internet company started by Swedish entrpeneur Niklas Zennstrom. According to a recent report in the Wall Street Journal, the on-line auction site is considering paying between $2-billion (U.S.) and $3-billion for the VOIP provider, while a report in the New York Post says the deal is worth $5-billion. Oh yes, and Skype has also reportedly hired an investment bank to look into an initial public offering, which sources say could raise billions.

Is it a coincidence that the name of this voice-over-Internet company rhymes with “hype?” Perhaps. It’s certainly possible that eBay is having takeover talks with Skype, just as it’s possible that Yahoo, Microsoft and News Corp. had talks — or even Google, Amazon or Time Warner, for that matter. Talking doesn’t cost anything. But does it make any sense for eBay to pay $2-billion, $3-billion or $5-billion for the company at this point in its development? Not in any universe that obeys the laws of financial reality.

That doesn’t mean it won’t happen, of course. With eBay and other maturing tech companies looking for sources of growth wherever they can find them, almost any combination you can think of has probably been considered by someone, somewhere. But that doesn’t mean such a deal would make any sense. Continue reading

Column: Kazaa fight continues

Here’s a column I posted at globeandmail.com about the Kazaa lawsuit:

“What a hydra-headed monster Shawn Fanning gave birth to. The Napster founder’s company didn’t single-handedly create the digital music revolution — German researchers arguably did that when they came up with the MP3 standard — but the Napster network poured fuel on the flames, and helped to make the terms “peer-to-peer” and “file-swapping” part of the public consciousness.

By the time Napster was crushed by a U.S. court, of course, it had already been usurped by Kazaa and Morpheus, a new breed of file-sharing network. And as the record and movie industries have shifted their focus to those newer threats, those networks too have been overtaken, by BitTorrent and eDonkey and Limewire, and other P2P systems that are still in their infancy. Like nailing Jell-O to a wall or trying to push a string, getting a handle on digital file-sharing is something that’s easier said than done.
The recent ruling against Kazaa by an Australian court is the latest attempt to grapple with the P2P threat, and like a similar decision by a U.S. court earlier this year it tries to walk a fine line between dealing with illegal activity on one hand and criminalizing an entire technology. Continue reading