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Facebook, Skype, Microsoft Partnership To Hurt Google But Benefit Start-ups

Facebook-Skype partnership to benefit start-ups: Expert

By Michelle Hammond
Thursday, 07 July 2011

Social networking giant Facebook has teamed up with Skype to offer free video calls in a move that could potentially help start-ups to communicate with customers according to a market research analyst.


Facebook, which recently confirmed that it has more than 750 million users, is stepping up competition with fellow tech giant Google by announcing the partnership with Skype.


With 170 million users worldwide Skype allows users to make low-cost or free phone calls over the internet, bypassing the standard telephone network by channelling voice and video calls online.


Skype was founded in 2003 by Swedish entrepreneur Niklas Zennström and was acquired by online auction giant eBay in September 2005.


It was sold to an investment group led by Silver Lake in November 2009 in a deal that valued the company at $2.56 billion and earlier this year Microsoft purchased Skype in a deal worth $US8.5 billion that is expected to be closed later this year.


Facebook is using partnerships and media features to increase Facebook’s audience and to avert user defections, and its latest partnership with Skype will help to achieve that.


“We’re using the best technology that’s out there for doing video chat with the best social infrastructure that’s out there in order to create some really cool new scenarios,” Facebook chief executive Zuckerberg said at the launch of the new technology.


Neil Stevens, vice president and general manager for consumer at Skype, said the partnership represents a “really strategic long-term deal”.


Foad Fadaghi, research director at market analyst firm Telsyte, describes the partnership as a natural fit, claiming it throws the gauntlet back at Google, which last week launched its own social networking service Google+.


Google unveiled several new tools integrated into Google+, including Hangouts, which allows video chatting among friends.


“I think video chatting will become an important part of online social networking so we expect people to want to see and communicate with a group of friends at the same time as making comments or posting pictures,” Fadaghi says.


According to Fadaghi there are opportunities for start-ups to take advantage of Skype’s partnership with Facebook.


The new video chat feature offers the potential to extend Skype to an ever wider audience, with Facebook users able to connect their accounts with Skype.


“Skype has been around for a long time and a lot of small businesses already use Skype … we might see small businesses acquiring customers via Facebook and making use of Skype’s video chat service,” Fadaghi says.


The partnership suggests Facebook and Microsoft are ramping up the fight against joint rival Google.


Microsoft cemented its bond with Facebook in 2007 when it bought a 1.6% stake in the company for $240 million.


Microsoft began including recommendations from Facebook friends into its Bing search engine in May, elevating results that receive a “like” from someone in the searcher’s network.


The Microsoft-Facebook deals are creating services that Google has yet to match. Google has tried to add social networking to search, creating its +1 button to shower favor on a news article, a company or even a search result.


But Google’s network isn’t equal to that of Facebook so clicking the +1 button doesn’t have the same impact as clicking a Facebook “like”.

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