Microsoft has agreed to buy the popular Internet telephone service Skype for $8.5 billion in the biggest deal in the software maker's 36-year history.
The deal gives Microsoft access to the market for real-time video and voice communications. The software maker said it plans to use Skype to support such products as the Xbox gaming system and Windows Phone.
Buying Skype would give Microsoft a potentially valuable communications tool as it tries to make a bigger splash on the Internet and become a bigger force in the increasingly important smartphone market.
The sellers include eBay and private equity firms Silver Lake and Andreessen Horowitz.
Microsoft chief executive Steve Ballmer said: "Skype is a phenomenal service that is loved by millions of people around the world."
Skype will become a new business unit within Microsoft, to be run by current Skype CEO Tony Bates, who will report directly to Ballmer.
Skype filed for a $100 million IPO last year. But the actual offering was delayed, and rumors surfaced last week that the company was in talks with Microsoft and Facebook.
Skype was founded in 2003.
Skype boasts about 663 million users worldwide. According to regulatory documents, Skype users made 207 billion minutes of voice and video calls last year.
Calls to other Skype users are free, while the company charges for those made to both traditional landline phones and mobiles.
Most people use Skype's free calling services, which has made it difficult for the service to make money.
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