Skype founders Janus Friis and Niklas Zennstrom are dropping suits against eBay, to whom they sold Skype in 2005, and against a consortium of private finance companies trying to buy Skype from eBay. The founders had accused both groups of intellectual property theft. They're dropping those lawsuits in exchange for 14 percent of Skype.

But former Wall Street Journal reporter Kara Swisher reported last night on Dow Jones' All Things D website that the founders would get not 14 percent but up to 13 percent of the company — 10 percent outright and an option to buy another 3 percent. Sacrebleu! Rob Wauters of rival TechCrunch was quick to rub Swisher's face in the minor error, writing that the founders "are getting 14 percent of Skype back for rights to the... technology their company... controls... and not 10% like previously reported by other media" (emphasis from original). Meow!

The press release issued by Skype actually confirmed Swisher's reporting that the founders had to put in money to get some of their shares. Swisher later acknowledged that the figure was 14 percent, just one percent higher than she had written. But she also engaged in a lengthy Twitter fight with Wauters and his colleague Erick Schonfeld (see below) over their public nitpicking and fact-bending. Maybe everyone involved in this fracas needs to take the next couple of days off. Oh, look at the calendar!

(Top pic via)

Skype founders Janus Friis and Niklas Zennstrom (pictured) appeared to have it made before the computer wizardly was allegedly stolen. They had eBay, to whom they sold their internet phone-call service in 2005, on the ropes. The online auction company was trying to sell Skype, but Friis and Zennstrom's barrage of software-licensing and copyright lawsuits against eBay scared off potential buyers like Google. eBay, it seemed, would be forced to accept Friis and Zennstrom's own lowball offer to buy back Skype.

Then a consortium of private finance companies swooped in with an offer — ultimately accepted — valued at a cool $2.8 billion. It just so happened that one of the buyers, Index Ventures, employs a guy named Mike Volpi, who used to work for the Skype founders. One of Volpi's tasks for Friis and Zennstrom, according to their suit (embedded below), was to learn how to replace the "Global Index" software code at the heart of their various internet communications software, including Skype. Being able to remove this software would potentially moot many of Friis and Zennstrom's Skype lawsuits, thus making Skype much more valuable to its owner — the company Volpi now works for.

Friis and Zennstrom are alleging that ex-employee Volpi stole secrets from them, and breached his fiduciary duty as chairman of one of their companies, online video company Joost. In so doing, they are not only kicking off an epic, $2 billion nerdfight, they are also cementing their reputations as among the most litigious entrepreneurs in tech. In addition to suing eBay in both U.S. and British courts, and Volpi, they've also filed three separate lawsuits against the investment banker who represented them in their sale of Skype, according to the New York Times.

For a couple of guys whose product is revolutionizing global communication, Friis and Zennstrom have a distinctly old-fashioned way of sending a message.

Joost lawsuit

Coverage elsewhere: VentureBeat, TechCrunch

(Top pic by Steve Jurvetson)

We're not going to explain every feature, quirk, and option in the Google Voice service, which is slowly giving out invites to those who request them. We've already taken a first look at Google Voice, and Google Voice's own Getting Started guide does a nice job explaining the service's ins and outs. We're looking to answer the question we seem to hear most often from commenters, friends, tech pundits, and just about everyone: What would I get out of it?

The wild card: number portability

If the rumors prove true, Google will, at some point this year, allow you to "port," or at least integrate, your existing cell phone number with its service, requiring none of the millions of phone numbers the search giant is supposedly securing. That would eliminate three of the service's biggest barriers to entry:

• Having to call Google Voice, and then dial a number, to place a call "with" your Google number, so it shows up on caller ID as such
• Having to store and reply to a separate SMS number for each of your contacts so that, again, your Google number shows up
• The time and hassle of getting your contacts to call you at your new Google Voice number, despite the fact that your old numbers still "work"

You might like Google Voice if you:

• Regularly use two or more phones: If you've heard about one feature of Google Voice, or its GrandCentral predecessor, this is it—and for good reason. Google excels at giving you one phone number for others to have, then letting you fine-tune which phones that number rings to an OCD level. If you want your wife to ring through to your work line between 9am and 5pm, but not your chatty, unemployed friend, you can do that. If you want your home landline to ring along with your cell during the hours your carrier charges for minutes, you can do that, too.
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• Loathe standard voicemail: "Please enter your passcode, followed by the pound sign!" "You have ... two ... new messages. To hear your"—You know what we're talking about. Using cell minutes and precious time just to hear your friend say "Try you again later" is almost as annoying as trying to wipe the voicemail icon off your phone screen. Google Voice makes it easy to play voicemail audio and read semi-correct transcriptions from a single web page, and it's a good bet it'll be integrated into Gmail for even easier access. When you're away from your browser, Google Voice sends voicemail notifications through email or text message, making it easy to know that you really don't need to step outside and call your sister back just to confirm you prefer Diet Dr. Pepper to Diet Coke.
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• Enjoy text messaging, but not phone keyboards (and fees): For anyone whose friends chide them about short or nonexistent text message replies, this is a game-changing feature. When sent to your Google Voice number, text messages are organized on the Google Voice site like chat conversations, with back-and-forth dialogue and options to reply or mark as read and archive. Writing a new message is also easy—hit "M" or click the SMS button, start typing a name or phone number, then choose the contact and type away. You'll still be charged for texts you receive on your phone, but it can be a real money saver when you're near your plan's limit for the month. Those with iPhones, Android handsets, or other smartphones can also make use of Google Voice messaging on the go with apps like the previously mentioned GV (Android) and GV Mobile (iPhone).
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• Want better filters on who reaches you, and when: Google Voice has four levels of annoyance resistance available to weary phone hostages. You can activate "Call Presentation" to have every unknown caller say their name to Google's servers, which then call you and ask if you want to take the call. If the annoyance is someone you know, you move them into a particular group (like "Annoyances") and make that group always go to voicemail. If they sometimes call about something important, Google Voice's ListenIn features lets you send them to voicemail, but hear what they're saying and pick up, if necessary. If you absolutely can't get a telemarketer or semi-stalker to take the hint, the video at left explains how you can simply have them hear something that sounds like an old-school disconnect notice.
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• Are down with Skype-like VOIP calling: Want to make calls over a computer-connected headset and not pay a dime for them? Google Voice allows you to add a phone number from the Gizmo Project and control when it rings through. Make a call through Google Voice's web interface, set it to ring your Gizmo number when it's connected, and the other party just sees your standard Google Voice number—you're effectively making an outbound call for free that Skype and the like would charge you for.
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• Make a lot of international calls: We haven't done a price comparison, but Google Voice's rates to international landlines and mobile numbers are said to be competitive, and you can call from your own phones without having to hunt down the right calling card.
  
• Record calls regularly (and legally): Just hit the number 4 during a call and Google's robotic queen announces "Call recording on." Right now, it only works with incoming calls, but the finished recording is ready for playing, downloading, or embedding in your Google Voice inbox in a matter of minutes. It's how I recorded my Jonathan Coulton phone interview for later transcribing and audio clip pulling.
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• Have or want an Android phone: iPhones, BlackBerries, Symbian-based models, and Windows Mobile devices will likely get Google-built apps for integrating Google Voice into their dialing, voicemail, and SMS interfaces. But Android phones already have an impressive third-party app for doing so, Evan Charlton's GV, and would be a pretty good bet on being the first, or at least among the first, platforms to get the Google Voice team's attention. Fully integrated Google Voice means free, conversation-threaded SMS, fewer hassles with your one-and-a-half phone numbers, voicemails that don't require talk time, and much more.

You won't like Google Voice if you:

• Rarely use your cellphone and/or text messages: Unless you're that rare breed of VOIP headset lover who doesn't ever talk on a cellphone, there's not a lot to recommend Google Voice to landline-focused folks. Your office's phone system offers (hopefully) most of Voice's features, and residential internet phone providers can fill in the other gaps. It could be a help to those who absolutely won't type out a text on a phone—but, then again, so can email.
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• Think Google knows too much about you: There's something to be said for breaking Google's personal data monopoly, and the tinfoil hat crowd have a whole new set of worries with Google Voice—your voicemails, calling history, and text messages are, after all, right on Google's servers, for who knows how long. It's not all that different from Gmail—Google breaking one user's trust could collapse the whole system—but it is something to think about.
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• Dislike Google's Contacts handling: Google Voice uses the same contacts database, so if its auto-inclusion of names you've emailed a few times drives you batty, well, you'll get the same results from Voice's Click2Call auto-completion. Only the names you've stored phone numbers for show up on Voice's dial feature, but we'd like to see a way to set a "primary" number that's the default when you're typing out a name.
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• Get annoyed at voice delays: Early Google Voice users (myself included) are noticing an audio delay on certain calls. Sometimes it's ever so slight, like a wonky cell phone connection. Sometimes you and the other party are toppling over the ends of each other's sentences. Google is certainly aware of it, but since it's a service that inserts a server as the middleman between parties, there might be an inevitable bit of latency on Google Voice calls, as there is with most international calls. If you've ever switched carriers because of voice quality or connection problems, you might find a new antagonist in Google Voice.
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• Really don't want to write another "New number" email: As noted above, Google's rumored to be working on offering number portability/integration for Voice. In the meantime, Voice users have to ask their friends, acquaintances, and business contacts to save a new number, figure out how to deal with the stragglers, and, in all honesty, hope the service isn't abandoned by Google anytime soon. If you live and die by your availability and can't stand the idea of being late to return even one call, switching numbers just won't fly. Everyone else has to make the call.

The company ought to be swimming in cash from taking a cut of every auction it runs, right? Nope, according to the New York Times:

eBay had $3.19 billion in cash at the end of last year, but $2.8 billion of that money is overseas and would be subject to repatriation taxes if the company were to invest it in its ailing United States e-commerce marketplace, according to analysts.

Luckily, it's found some eager buyers: The founders of the startups it enriched through purchases. Garrett Camp and Geoff Smith (right) have just bought back StumbleUpon, a social-news startup it bought for $75 million two years ago, with the help of some venture capitalists. Janus Friis and Niklas Zennström, the founders of Skype, are hoping to buy Skype for considerably less than the $3.1 billion price eBay paid for the company in 2005.

$390 million in the kitty isn't exactly bankrupt. But it's hardly enough to fund eBay's efforts to fix its U.S. marketplace and efforts to expand into consumer credit with Bill Me Later, an online-lending startup it bought last year.

Silicon Valley venture capitalists and entrepreneurs like to think they're putting their resources behind innovation. But what are they doing here? Funding middle America's shopping habits.

(Photo of Zennstrom and Friis via Joost)

Web 2.0 was a bubble that never inflated — a shimmery illusion that popped well before we stopped talking about it. Precious few people got rich from the notions its proponents championed, such as user-generated content and social networks.

Calacanis was the only person of note to cash out on the blogging craze, selling a set of blogs to AOL for $25 million. That was a paltry figure in the grand scheme of things, but enough to set him up in a comfortable home in Brentwood and buy him a $109,000 electric sports car. And enough to make him a Web celebrity, with thousands of followers on Twitter and friends on Facebook — the quantifiable metrics of fame preferred by those who are not really famous.

The startups of the Web 2.0 era have proven similarly vacuous in their success. Skype, the Internet-calling service, sold for $2.6 billion to eBay in 2005; the auction giant wrote off $1.4 billion of that purchase last year. YouTube, sold to Google for $1.65 billion, is an acknowledged failure, with product managers scrambling to bedaub it with enough advertising to merely pay for its bandwidth bills. And the IPO market that powered the '90s bubble? All but invisible. The most recent big offering was in August for Rackspace, a boring company which hosts servers, and its stock has since fallen by half. With Wall Street on its knees, no one expects another IPO soon.

Will there be another bubble? Technology moves in cycles and is prone to investing fads, so yes, almost certainly. But there is nothing that looks set to inflate it. Cleantech, the next big hope of Silicon Valley, requires vastly more capital than Internet startups, and capital is now in short supply. (Falling oil prices, too, discourage the development of green energy.) While Internet users are devoting more attention to social networks, advertisers are staying away. Calacanis's venture, Mahalo, is a spiffed-up rehash of the kind of Web directory Yahoo built in 1995; he's now cooking up a new, secret project — which suggests that the loquacious entrepreneur realizes his original plan fell short. He may be onto something, if only in admitting failure. If this bubble fell short in making the likes of Calacanis rich, they have their own paucity of ideas to blame.

Here's how it works:

Get up one morning, check your email on your iPhone. There's a message from PayPal confirming your 100 Euro purchase of services from Skype.

Whoa. I didn't order 100 Euros of anything. And in Euros?

You go to your computer, wake it out of its sleep, and an alert window from Skype is waiting for you.

"Your Skype password has been recently changed. You need to sign in again with your new password in order to use Skype. This is a security measure taken in order to prevent your Skype Account from being abused."

Hmm. I didn't change my password.

You try to login to Skype. You can't. You visit your PayPal account. 100 Euros has been taken out of it to purchase Skype services. You think fast, cancel the agreement you had between PayPal and Skype
to pay a $3 monthly fee for SkypeOut. You send a fraud report to PayPal. You send a fraud report to Skype.

In both reports you summarize the issue: someone hijacked your Skype account and stole 100 Euros (about $142) worth of Skype services from you. Nothing authorized by you at any point. It's called theft. All will be good, right?

PayPal takes four days to make a determination.

Quote: "A PayPal claims specialist has reviewed the case and determined that the claim does not meet the criteria for unauthorized use, so the case is now closed."

Are you kidding? According the the "specialists", theft is not unauthorized use. Skype gets to keep its 100 Euros that was stolen from you.

You think, "I'll just appeal this..where's the 'appeal' link?" You find there is none. You have to write PayPal a letter. Yes, a letter. To Omaha, Nebraska. A letter asking for the documentation they used to make the determination. An Internet company insists you write them a letter.

OK, surely Skype will help out. That is, if they ever write back. They take nearly two weeks to get around to assigning a human to the case.

Skype writes back in 10 days. "Patrick P. is on the case. Patrick says: "In your case it appears that someone has succeeded in fraudulently obtaining your PayPal account and purchasing credit."

You think, "great, somebody understands."

Patrick goes on:

"First, you are not liable for this transaction in any way. "

Sweet. You'll just appeal to Skype and... Wait. You read further.

"We suggest that you submit a Transaction Dispute via Paypal.com."

Great. Back to square one.

Patrick sends another email a couple of days later. It's about that money that was stolen from you to buy services from them that you didn't authorize.

"Skype can not refund the money you might have lost due to this incident. Every user has to take care of his/her security systems on private computers."

"Money you might have lost?" You did lose money...and by the way, it's your fault, loser.

(Photo by Joi)

With video and text chat allowing managers to check in on employees and feed them scripts, as well as cheap international calling and archiving conversations, it can work as a cheap and easy tool for managing remote customer-service centers to close those deals made on eBay and keep the credit card charges flowing into PayPal. In other words, it's about lubricating "transaction friction" by increasing buyer confidence and decreasing credit card charge-backs and complaints. Now if only there was a country with lots of English speakers and really low wages.

The move effectively put Skype on the sale rack, stirring up rumors that companies such as Google and News Corp. would soon offer bids. Of course, if anybody is interested in purchasing Skype, it doesn't look like the price will go up anytime soon.

Here are the highlights, handily pared down from SeekingAlpha's voluminous list:

• JPMorgan: Raises estimates, juiced about surprising revenue and operating profits.
  
• UBS: Raises price target from $38 to $41, still has concerns about erosion in core listings growth.
  
• Merrill Lynch: Reiterates Neutral rating, still waiting to hear if other new investments will flop like Skype.
  
• Goldman Sachs: Raises price target from $43 per share to $51, likes stable growth.
  
• Deutsche Bank: Downgrades eBay from hold to sell, complains about 2 percent transaction volume growth (and potentially declining soon), user disengagement, higher ad costs, declining purchase frequency, rising seller costs and operating margin pressures.
  
• RBC: Raises price target from $40 to $44, but only because they're optimistic about the whole sector.
  
• American Tech: Raises price target from $45 to $47, approves decision to cut auction listing fees.

  (Photo by Ryan Fanshaw Photography)
  

MYSPACE AND SKYPE ANNOUNCE PARTNERSHIP BRINGING FREE INTERNET VOICE COMMUNICATIONS TO MYSPACE GLOBAL COMMUNITY

Partnership Creates World's Largest Online Voice-Connected Community

Beta Version of 'MySpaceIM with Skype' Announced Today

LOS ANGELES/LUXEMBOURG, October 17, 2007 — MySpace, the world's most popular social network, and Skype, the leading Internet communications company, today announced a partnership to empower the MySpace community with voice communications. With more than 110 million monthly active MySpace users and 220 million Skype(tm) registered users around the world, this partnership connects two of the most popular communications platforms on the Internet to create the world's largest online, voice-connected community. The announcement unveils MySpaceIM with Skype, a new product that integrates MySpace's popular IM client—currently the world's fastest-growing IM platform with more than 25 million installed users—with Skype's free, high-quality voice-calling capability. The partnership will also enable users to link their MySpace profiles and photos or avatars to their accounts on Skype. Both products will be available to users starting in November. Launching in 20 countries where MySpace has localized communities, MySpaceIM with Skype will enable millions of users to place free Skype Internet calls to other MySpace or Skype users. The addition of Skype voice-calling to MySpace's instant messaging feature gives users more ways to easily connect with friends and family around the world, and does not require MySpace users to download any additional Skype software.
"MySpaceIM with Skype is a truly groundbreaking product integration and partnership," said Chris DeWolfe, co-founder and CEO of MySpace. "Skype has the leading technology in Internet voice communications and an enormous international user base that we're thrilled to connect with our existing community. Our network has no geographical boundaries — Internet calling is the natural next step for how our members communicate with each other."
Skype is available in 28 languages and is used in almost every country around the world. The ability for Skype users to link their Skype accounts to their MySpace profiles will be available globally, except in Japan, China and Taiwan. In addition to free, high-quality Skype calling, MySpaceIM with Skype will also allow the users of the MySpace network to optionally select Skype's premium fee-based products, including:
* SkypeOut(tm) - To make calls to landlines and cell phones domestically or internationally;
* SkypeIn(tm) - A local phone number to receive calls wherever you are in the world from other people on landlines or cell phones;
* Voicemail - To take voice messages when you're busy or offline; and
* Call forwarding - To redirect incoming Skype calls to a landline or cell phone.
"Both MySpace and Skype have become a part of people's lives by bringing people closer together, no matter where they live in the world. This partnership reiterates that Skype is the platform of choice for Internet communications because we make it simpler and easier for people to place free calls to one another whether they are on Skype or within the MySpace network," said Michael Van Swaaij, interim CEO of Skype.
MySpaceIM with Skype takes advantage of the many personal privacy settings available to users throughout the MySpace network. Users who have a MySpace profile set to "private" can not receive a Skype call from someone who is not on their friends list. Users can also choose to allow only those individuals they have affirmatively added to their Skype personal contact list to call them. Users are empowered to block any MySpaceIM with Skype user at any time, and with the "incoming call window" users can pre-screen incoming callers in order to accept, ignore, or block the call.
Financial terms of the MySpace and Skype deal were not disclosed.