Did eBay admit that they are stupid beyond belief?

It made big news in 2005 when eBay bought up Skype to the tune of $2.6 billion with a lot of talk about how it would change how online auction could done. Well here we are four years later and eBay still hasn’t figured out how to wire it into their existing auction business. It has gotten to the point that they are even talking about spinning it out as a separate company on the hunt for an IPO.

Now as smart as that might be there is a great big hitch right in the middle of all this – eBay doesn’t own the core technology that makes Skype work. That still belongs to the original founders of Skype through their company Joltid. It is also the same technology that eBay has been paying licensing fees to Joltid so that they could keep Skype running.

Uhm. Excuse me but just how brain dead is a company that will spend $2.6Billion on a company and its products but not make sure that they end up owning the very core part of that company that actually makes the product work. I’m sorry but that has to the biggest blunder in the world of tech and internet business that I have ever seen.

As it is right now eBay is headed to British High Court to try and force Joltid to let it continue to use the technology. However they are already warning people that there might be a chance that the technology they are developing in-house to replace what they were licensing from Joltid.

eBay is saying that if they can’t come to an agreement with Joltid and their software solution isn’t ready by the deadline they may have to shut Skype down. As well even if they do manage to get their software solution up and running in time Skype users may experience lose of functionality in Skype.

In a quarterly report filed with the US Securities and Exchange Commission, eBay said in no uncertain terms that if it lost the right to use the software it would most likely have to shut Skype down.

eBay said it was working on developing ‘‘alternative software” to that licensed through Joltid, but this ‘‘may not be successful, may result in loss of functionality or customers even if successful, and will in any event be expensive”.

‘‘If Skype was to lose the right to use the Joltid software as the result of the litigation, and if alternative software was not available, Skype would be severely and adversely affected and the continued operation of Skype’s business as currently conducted would likely not be possible,” eBay wrote.

In the filing eBay also said that, even if it was successful in developing alternative software, the technical challenge of assuring backward compatibility with older versions of Skype’s technology ‘‘may be difficult to overcome”

Source: The Age :: Shock threat to shut Skype

Jeez no wonder Meg Whitman ran when she did.