If you follow technology news—or even if you don’t—you couldn’t have missed this incredible story about Skype.
Apparently when Ebay bought Skype for $2.6 billion back in 2005, they didn’t acquire all of the latter’s core product. Specifically, Skype’s founders sheltered key peer to peer subsystems for the service in another company, Joltid, which has been licensing the technology to Ebay (and others, presumably). Joltid recently announced that it will no longer license the technology to Skype. Details are murky, with some reports suggesting that Ebay broke the agreement, and others indicating that Joltid acted independently.
The typical reaction to this announcement has been incredulity. How could Ebay spend $2.6 billion and not get the full codebase? It’s an even worse error than the infamous 1980 PC agreement, in which Bill Gates got IBM to license MS-DOS rather than buy it. IBM agreed because they thought future profits were in computer hardware. Gates proved that a great fortune could instead be made in licensing the software that ran on that hardware instead.
While wry, Microsoft’s early victory was also much more logical than Joltid’s. The former retained rights to their software in order to build a market. The latter seems to have retained rights—just because.
It’s a wonderful reminder that business does not operate by the pure logic of maximizing profit, even at the highest levels of corporate visibility. I can only speculate on Joltid’s goals, which might even involve some clever long-term plan like Gates had in 1980.
But I prefer to read Joltid’s act as a fit, a tantrum. Can’t business become boring and predictable, even if—or especially when—it involves the regular devotion of an old timer like Ebay? Like a child’s extended play date with a socially challenged acquaintance, eventually one simply wants to go home, to do something different, to escape the nuisance.
Indeed, tantrums are logically consistent business strategies, even if they are not fully explainable by the traditional short-term profit goals of public companies. One has opportunity costs, resource conflicts, orthogonal personal goals, and so forth. The collision of individual and corporate interest is usually hidden in a big, publicly traded business, until a tiny company like Joltid performs a Heideggerian tool-breaking upon one. Corporations might be “persons” by the legal definition, but the property that separates them from humans is not ethics, but caprice.
Perhaps today’s business climate needs more tantrums. Look at how Joltid’s forced Ebay to make incredibly clear disclosures in their SEC filing about the possible effect of losing the Skype peer-to-peer license:
There is the possibility of an adverse result if the matter is not resolved through negotiation. Skype has begun to develop alternative software to that licensed through Joltid. However, such software development may not be successful, may result in loss of functionality or customers even if successful, and will in any event be expensive.
Isn’t this precisely the kind of “transparency” that contemporary culture keeps telling us we need more of? It’s about as close a quarterly report can come to saying outright, “Our Skype business is fucked.”
Finally, tantrums remind consumers that products do not have a right to exist. No matter how many users Skype may boast, no matter the $170 million in annual revenue it generates for its parent company, nothing ought to guarantee that access to the service should continue. What a refreshing wake-up call, a reminder not to become burdened by the insane devotions of techno-fandom and perceived necessity! It serves as a reminder to take everything as a temporary rift, like a shopping trip to Trader Joes. As Louis CK told Conan O’Brien in the clip below, everything is amazing, yet nobody is happy.
And more so, perhaps Skype’s bout with a terminal condition ought to invite us to consider the media that VoIP has enhanced, to use Marshall McLuhan’s term. Telephony in general enhances nearness, by collapsing distance. But VoIP also enhances budgets, by reducing cost. The frugality of VoIP makes real distance easier to justify: counterintuitively, when media get enhanced, they also disappear. How facile it becomes to agree to that imprudent trip to Eugene or Talinn or Seoul when VoIP will make contact with home so relatively easy.
So, let’s relish in Skype’s potential demise. And I say that as a Skype user, one who has come to rely on Skype in a number of situations. But, it’s not as if other options don’t exist. When Trader Joes discontinued Metropolitan dark chocolate-covered butter biscuits, it gave me an excuse to try a new cookie. Or even, an excuse not to eat cookies at all.