MediaFile

Tech wrap: Microsoft’s Skype deal roasted

May 10, 2011

Microsoft’s move to buy money-losing Internet phone service Skype for $8.5 billion was immediately skewered by critics and investors, who questioned the logic of the deal and suggested the software giant is paying far too much. The price is about double the expected value of Skype if it had gone ahead with its planned IPO.

“They really have to do some explaining as to how this company merited that price and how they’ll return the value to shareholders,” said Kim Caughey Forrest, at Fort Pitt Capital Group, which holds Microsoft shares.

The deal was a fresh reminder that Microsoft has no record of making acquisitions pay off. Its 2007 deal to buy online ad firm aQuantive for $6 billion was a flat-out failure, writes Bill Rigby.

Google launched “Music Beta by Google”, an online music locker service on that allows users to store and access their songs wherever they are, similar to one launched by Amazon.com in March. And like the Amazon Cloud Drive player, the Google music service is being introduced without any prior licensing deals with major music labels, following months of fruitless negotiations.

Sony said it would take at least “a few more days” to restore service to its online PlayStation Network, which was breached by hackers in one of the largest Internet break-ins of all time.

Lawmakers considering new privacy laws scolded Google and Apple for not doing enough to guard mobile device users’ location data, despite executives’ assertions that they do not abuse the information. “I have serious doubts about whether those rights are being respected in law or in practice,” Democratic Senator Al Franken said at a hearing of a new subcommittee on privacy, technology and the law.

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