Tense Times for Web Phone Apps Google Voice, Skype - Page 2

Let's look at the larger issue. What is Google doing with Google Voice beyond funneling calls? Google Voice is intended to disrupt the phone carrier business. It would love to rip this archaic, money-grubbing mess out by its roots and make all calls Web-enabled, all of the time.

Of course, Google Voice doesn't connect users from endpoint to endpoint. However, Google could do this if it used VOIP clients such as Gizmo or Skype as the endpoint bridges.

And that leads us to the next Web-calling nightmare. Skype is a VOIP client, enabling PC-to-PC calls, voice and video conferences and more. In fact, with 481 million users worldwide, explaining what Skype does feels like overkill. eBay, which bought Skype in 2005, plans to sell 65 percent of Skype to Silver Lake and other investors, valuing Skype at $2.75 billion.

Thanks to a simple download, I can log on to my computer, click a button and not only make calls free online, but see the people with whom I'm chatting. It's wonderful. It's also being threatened by a major lawsuit by Skype co-founders Janus Friis and Niklas Zennstrom, who sued Skype, eBay and erstwhile investors in the company for copyright infringement in California district court.

Friis and Zennstrom then sued Michelangelo Volpi, who put together the group of private equity and venture capital funds that agreed this month to buy Skype. They say he misused confidential technical information about Skype and Joost to try to convince investors that he could sidestep a dispute over Skype's use of the software owned by the founders.

Industry observers say these suits are motivated by Friis and Zennstrom's desire to regain Skype for their own purposes; the men have another P2P software company, Joltid. After the first lawsuit versus Skype, Bernstein analyst Jeffrey Lindsay said in a research note:

""We see the lawsuit as self-interested because the owners of Joltid tried to buy Skype themselves earlier this year. We doubt therefore that their objective is to have the business permanently shut down-which we estimate would cost eBay shareholders up to $2.12 per share worst case. Instead we think they are likely to be seeking either a financial settlement or the opportunity to buy the business back themselves at a lower price than Silver Lake, et al are offering.""

Why is this a tense time for Skype users? If the court sides with Friis and Zennstrom, it could enjoin Skype from using the core intellectual property that makes Skype calls possible. No IP, no free Web calls.

A lot is at stake here, for Skype, the co-founders and the users. Lindsay said he doubts Friis and Zennstrom are gunning to shut down Skype for good, but Om Malik argues they aren't above such a power play.

So, these are tense times indeed for Google Voice and Skype. Google Voice could be the Web calling app that prompted a major rewrite of Internet regulations, while Skype could be sued into closure. These are worst-case scenarios, but it's better to be prepared than unaware.