Why Google Does Not Own Skype

http://edition.cnn.com/2011/TECH/web/05/11/google.skype.wired/

by vladd • 15 years ago

151 91 15 years ago

edition.cnn.com

cygwin98• 15 years ago

That's a good read. The best way to prevent a wrong purchase is not to purchase it. I admire Chan's courage and slyness to sabotage that deal, he must have saved Google a few billions of dollars: Google has enormous data centers, and capable teams, lots of loyal Gmail users, there's nothing that would benefit Google by buying Skype. Those reasons also hold for Microsoft. I feel sorry for Microsoft as they just burnt a few billions for no gains --- that enormous amount of money should have been spent to hire talents and put into R&D.

dspillett• 15 years ago

It depends what immediate plans they have. If they want skype-like voice/video features for integration in some product(s) soon it may make more sense to buy in the already working tech and just add what is needed for the integration. Designing, building and testing their own code and infrastructure could be cheaper in the long run but would take far longer than just buying in the code, talent and infrastructure that Skype already has.

Also the MS brand does not command immediate trust in many, so convincing users to use an MS product over something else is not as easy as it once was. As well as the code, people and infrastructure they've got the brand, a name that a lot of the general public already "trust" as they already use a product carrying that brand.

mgkimsal• 15 years ago

It's not just about trust - it's about cross-platform as well. Whether they continue that or not, who knows? But the ecosystems they've built before have all been MS-only. Skype is inherently cross-platform, and that's something they wouldn't ever have built in-house.

bad_user5• 15 years ago

According to Microsoft, Windows Live Messenger has ~ 300 million active users.

That may be less than Skype (I don't know), but Skype is mostly redundant tech for them.

This was definitely a brand purchase - and such purchases may be worth it, but I can't think of a single product that Microsoft bought and that doesn't scream "Microsoft" all over -- so whatever trust in Skype consumers have, those consumers that don't trust Microsoft will probably leave Skype at some point.

Duff• 15 years ago

For big companies Microsoft owns email, and is in the process of owning voicemail, since it's part of Exchange now. They want to run your phone system too, but Cisco is the leader in that space at the Enterprise, and a bunch of telco/cable companies in the SMB space.

So how is Microsoft competing?

In the enterprise, they embed the phone (Lync) technology pervasively and throughout their platform. So, without doing anything, I can click to call from SharePoint, email or SMS from an Office app, videochat from PowerPoint. They're exposing the communications mechanisms everywhere.

IMO, this Skype thing is intended to do the same thing, but on the consumer and SMB side. Unified communications for the millions of people using Hotmail/Live and Skype -- and for the millions of business people who DO NOT have UC today. Skype gives them consumers in Europe and small business everywhere.

One of the holes in Office 365 is a voice offering for smaller companies -- the pricepoint for the full Exchange/Lync suite is really high unless you have 10,000+ seats. So you can give small companies with little money access to unified communications, buy accessories like handsets and speakerphones from the same partner (Polycom) and eventually graduate into the enterprise offerings.

brudgers• 15 years ago

>"Google has enormous data centers, and capable teams, lots of loyal Gmail users, there's nothing that would benefit Google by buying Skype. Those reasons also hold for Microsoft."

Data centers and capable employees are not reasons one way or the other (unless the company suffers from NIH syndrome); they are simply facts. Loyal users are, on the other hand, a consideration - but there are fundamental differences between Google's customers and Microsoft's particularly in regards to Microsoft's B2B orientation versus Google's ad revenue based model.

While peer to peer is problematic for Google's core revenue stream which requires consumers to frequently access Google's servers, peer to peer is perfectly consistent with Microsoft's core business wherein customers' contact with Microsoft's data centers is relatively infrequent and intermittent - e.g. Microsoft's revenue model works if a customer only contact with Microsoft servers is once a month on patch Tuesday.

In the long run, Microsoft can certainly screw the pooch on the deal. However, the purchase leaves no doubt that Microsoft sees telephony as far more than mobile. One could argue that they have made Google Voice a distant second in the space, e.g. very limited geographic availability for user accounts.

unwind• 15 years ago

So ... If "cloud computing" is the new paradigm that Google works in, and that's why they should avoid the old "peer to peer" paradigm that Skype is using, where does that leave "client/server"?

I had serious problems making sense of that. I guess they mean that since Skype is peer to peer, that leaves too few places for Google's server-oriented infrastructure to inject advertisements?

delinka2• 15 years ago

"Cloud" is the new "client/server." The "cloud" is the server and an app (browser, specialized app, w/e) on your computer (desktop, smartphone, w/e) is the client.

It's just that the server part is now [theoretically] a bunch of servers in different locations [theoretically] to allow failover. Theoretically.

And yes, I'm almost certain that's Google's problem with the Skype model: no convenient place to stick ads. (OK, sure, the client app could just get ads from Google, but if the p2p voice protocol works w/o Google servers, you can write a client that avoids the ads.)

bad_user5• 15 years ago

You can't create an alternative Skype client.

Protocol is closed and little progress has been made for reverse-engineering -- which I think would also be illegal, since the data is encrypted and then you're at odds with the DMCA (IANAL btw -- the DMCA grants a safe harbor for reverse engineering, but that hasn't worked out so well for DRM).

To my knowledge there is no alternative Skype client, not even for the IM part -- Pidgin has integration with the official Skype client and piggybacks on top of it. If you don't have the Skype client installed and running, Pidgin doesn't work.

P2P in this particular case is really not the freedom-giver technology that allows you to workaround Skype's servers. If Skype wishes to serve adds to you, or to track you, there's really not much you can do about it.

Maro• 15 years ago

You can also get rid of Google ads in your browser, so I doubt that's a major issue.

magicalist• 15 years ago

no ads in google voice...

mirkules• 15 years ago

Actually, I had a major problem with that as well, especially this sentence: "He concluded that one of Skype's key assets -- its peer-to-peer technology -- was a mismatch for Google, which worked on the newer paradigm of cloud computing."

I think the underlying problem is voice-recognition technology. I read somewhere (sorry, no link right now) that Google is using Google voice to hone in on their voice recognition technology, which we are now starting to see in Android. P2P kind of side-steps the Google servers (or, to phrase it more appropriately, avoids the MITM), thereby not providing any real use to them.

Remember, Google's business model is data. Control, collection, mining of lots and lots of data. P2P just doesn't facilitate that, so that's why Google chose to reject it.

joshaidan3• 15 years ago

"Peer-to-peer just eats up your bandwidth, right, it's like the old technology."

This quote intrigues me the most. Is peer-to-peer really bad, and uses a lot of bandwidth, or is it just bad for Google?

delinka2• 15 years ago

That's just spin to make the architecture sound like a bad idea. Yes, p2p anything uses more of your upload bandwidth than any other means of communicating on the 'net. IMO, that's not "bad" because it keeps the tubes all decentralized and more capable of routing around damage. Like it's supposed to do.

tincholio5• 15 years ago

Nope, it's not about that. Skype can, if you're not running behind a NAT, make you a supernode, and in that case you will be routing calls between NAT'ed hosts "on your dime". Basically, it may be that you contribute your bandwidth to calls that have nothing to do with you. Presumably this isn't the case in the "cloud based" service, where the some server would act as a gateway between NAT'ed hosts.

bad_user5• 15 years ago

Yes it does, because in addition to your own traffic, your line also has to support the traffic made by other people - with torrents, this means uploading to other people what you've been downloading.

I don't know exactly how much bandwidth Skype uses, but it has been the most reliable way of doing video-chats for me, even on the slow Internet connection I'm using.

joshaidan3• 15 years ago

Yeah, but in these use cases it's using a lot of traffic because the application of file transfer, and voice/video conversations use up a lot of bandwidth.

If we take, for example, an application like Bitcoin, it uses a minimal amount of data transfer because all it's doing is coordinating transactions and mining.

If take a simple use case like P2P text chat, would the bandwidth costs be all that bad compared to a cloud or client-server model?

r00fus• 15 years ago

Likely, it doesn't have anything to do with what's said, but what's unsaid... how would Google monetize that traffic/data and use it to augment their existing services?

If it's all encrypted P2P and supernodes aren't centrally located but randomly distributed throughout the Skype-net.

They couldn't place ads without rewriting the P2P to have more intercept points.

If it is about money, then I think Chan's point does hold. Google would be buying a money losing venture that doesn't fit with their own monetization model and would take years to integrate if at all.

kznewman• 15 years ago

If all this is true, I would have a problem with a co-worker who would stand up and lie. By starting the meeting by being "super supportive" while knowing along with co-conspirators that you were trying to kill it, a good deal of creditability has been destroyed.

Maybe I am naive, and this is how things really get done, but regardless of which side I might have been on during this meeting, he is no longer trusted.

toddmorey• 15 years ago

I personally don't buy it. Sounds like a rewrite of history to more positively frame his involvement in the events that transpired.

S_A_P• 15 years ago

I kind of agree here. I think it says more about Googles culture not being all that different from any other big company. This article insinuates to me that politics are more important than sound ideas that are good for the business. If the skype deal was bad because it would need a large overhaul, why not just lay out a convincing case to that effect?

bad_user5• 15 years ago

     politics are more important than sound ideas 
     that are good for the business

The problem in big corporations is that there's lots of voices and lots of opinions floating around. You can't really distinguish signal from noise unless you have some kind of hierarchy.

Google cannot be different in that regard. They can't work with a flat organization in which Joe Sixpack has the same credibility as an early employee -- they are too big for that.

The only way such a corporation can improve (over the rest) is to build that hierarchy based on better metrics than the rest, to avoid situations in which big responsibilities fall on complete morons that can kiss ass. Such a corporation would also need to maintain the number of layers to a minimum.

Politics in big corporations are inevitable, which isn't necessarily bad, it's just a different environment than in a startup.

maxwell5• 15 years ago

I think you're confusing politics with persuasion. Technical people have a problem with persuasion; I did, before I joined a large company, decided I wanted to actually change things for the better, and realized there's nothing dishonest about convincing people that someone will improve their company/lives. I was just bad at it.

Technical people seem to lay out arguments that are sound, but just aren't convincing or appropriate for the audience at hand. This is why shitty technology can win out when the customer lacks the time to make an informed decision, and makes the perfectly rational decision to go with the more convincing pitch.

And that's just it: decision makers don't have time to go through a thorough, completely objective, scientific argument. So, you either do what you need to get things done in what you feel is the right way, or you don't. There's nothing wrong with hacking a meeting, so long as the hack benefits the company, or at least is done in the company's best interest. As with software, the only bad hacks are those that benefit the hacker at the expense of the organization.

paulrademacher2• 15 years ago

Sounds like all he did was say "let me tell you everything great about this.... and now here's why I actually oppose it." How is that lying?

benologist• 15 years ago

Because a classy employee sabotaged the deal because Skype is P2P and therefore would require a complete rewrite.

What an odd article.

balac• 15 years ago

> "I even had a [PowerPoint] deck that was super supportive of it," he said.

I sincerely hope that it wasn't PowerPoint...

prewett• 15 years ago

This article makes me a bit worried about Google. It reminds me of emperors and sultans (e.g. Sergei and Page) manipulated by their courtiers (e.g. Chan).

dstein2• 15 years ago

My tinfoil hat theory is that Google is attempting to be the router for all of humanity's computation and communication.

lurker192• 15 years ago

That is basically Google's mission statement as laid out in their IPO docs : to organize all the world's information. We wrongly thought that was just a fancy phrase for webcrawling.

paulrademacher2• 15 years ago

A good company empowers its employees at all levels to present arguments upwards.

moo• 15 years ago

The poor Linux Skype UI is looking better now as it might not even exist in the future.

cybernytrix2• 15 years ago

"this is the dumbest piece of shit"... I've read in a long time! All the p2p FUD is just that. In TV like Skype the data path is still p2p. only call setup is server based.

tincholio5• 15 years ago

That's the case only when the clients are not NAT'ed. When they are, Skype uses supernodes (other clients who are not NAT'ed and have good connections). Other technologies have different names for this, but basically need a 3rd party with public interfaces (e.g. in SIP applications, you often have media relay servers).

cybernytrix2• 15 years ago

I meant "GV" not TV. The NAT case only applies when both the clients are behind NAT, otherwise you do not need a relay node. Also there seems to be a way to avoid a relay even if both are behind a NAT. Read the paper, "Autonomous NAT Traversal", joint work with Christian Grothoff, Nathan S. Evans, and Andreas Müller published by IEEE at the IEEE P2P'10 Conference (bib, pdf) http://samy.pl/pwnat/

lurker192• 15 years ago

TV? GV?

meterplech• 15 years ago

I think a side-lesson from this article is how difficult acquisitions/enterprise sales are in general. When you are working with a huge organization like Google you really need to identify the few key people in favor of your deal and who are trying to scuttle it. I think Chan was perhaps right for Google to not buy Skype, but it's a good lesson when you are trying to get Google to buy your startup. Or even if you are trying to get a big company to license your technology or be a customer. Find your benefactors and detractors and manage both to win deals you want.

tokenadult• 15 years ago

When you are working with a huge organization like Google you really need to identify the few key people in favor of your deal and who are trying to scuttle it.

More generally, this is known in economics as the agency problem of the firm. (I Googled for some handy references, but I'll let readers who are interested seek out the references that best fit their own background, as I wasn't completely satisfied with any of the links I found.) Employees of companies are naturally looking out for their own individual interests, as well as (the company's shareholders hope) the higher good of the company. Setting up company policies to provide incentives for shareholder-value-maximizing decisions is not easy, especially when many of those decisions involve predictions of an uncertain future, in which outcomes for individuals may differ from the outcome for the company.

stcredzero6• 15 years ago

Google has the Gizmo7 technology. If Microsoft starts making Skype really suck, Google is in a good position to jump in with the solution. The problem is, if Microsoft does things right.

th2• 15 years ago

Gizmo5: http://www.google.com/gizmo5/

stcredzero6• 15 years ago

Whoops, wrong single digit prime number.

klbarry• 15 years ago

Does Chan have his own PR company? This article couldn't have done a better job promoting this "brilliant product manager" (articles words).

gyardley• 15 years ago

It's a classic 'you scratch my back, I'll scratch yours' situation. Steve Levy wants to make his 'In The Plex' book worth buying, Wes Chan presumably wants some positive exposure - so Wes Chan gives Steve Levy interesting information for the book that also happens to make him look good.

I doubt this sort of trade-off even has to be voiced - it's just implicitly understood. Although in this case, I think the anecdote backfired - Chan seems really smart, but also somewhat manipulative.

mrshoe• 15 years ago

I hate hate hate this kind of politicking and conspiring to team up during meetings. Not to mention the fact that he presented an entirely dishonest slide deck.

This is poison for any organization, and keep in mind that it can (and does) happen in even the smallest of startups. As a leader you need to be vigilant and stamp it out, if you want your company to be healthy.

Edit: And the way you stamp it out is to simply not promote the people who practice it, and promote those who don't. Once it has risen to the higher ranks I agree it is difficult to remove (although it can be done when, for example, Steve Jobs returns to Apple and cleans house).

stcredzero6• 15 years ago

It's exactly this sort of thing that's a big part of the big company atherosclerosis. Here, we are getting an account of how Google suffers from it.

Apocryphon2• 15 years ago

Who's to say that not buying Skype will help Google in the long run?

maxwell5• 15 years ago

Suffering? Buying Skype would've been a bad move for the company, and the forces of rationality won out.

arkitaip• 15 years ago

I agree with you but I'm not sure this type of conspiracies are possible to detect when so many senior managers and people close to the founder are in on it. Larry and Serge are completely dependent on the people who surround them and if they start questioning every single initiative, Google would risk becoming draconian and have a distrustful atmosphere.

synnik• 15 years ago

I hate it, too.

But hate it or not, this is reality in the corporate world. Knowing the correct technical answer is nowhere near as difficult as getting the powers-that-be to agree with you.

For small startups, perhaps you can stamp it out. At large corporations, it isn't quite that easy.

reso• 15 years ago

Came here to post this. I'm really sad to see this kind of practice going on in Google now. Moreover, the fact that they cooperated with an article about it is slightly disturbing. How are all the other people involved with the deal going to feel when they find out they've been had?

slackerIII• 15 years ago

Humorously enough, this kind of dynamic is why Skype at Microsoft is probably doomed.

dkarl• 15 years ago

I disagree. One guy became convinced, for honest and legitimate reasons, that the deal was no good, and he went to the right people and convinced them, using honest, legitimate reasons, that the deal was no good, and then the guy who was properly placed to make the decision scotched the deal while honestly presenting his reasons for opposing it.

Maybe I'm a little jaded, but that sounds pretty darned good to me. I would call it "politics" if the people involved did things for selfish reasons, hid their true motivations, spread misinformation to support their cause, or conspired to avoid oversight. When someone does things for the right reasons, is open about his reasons, and doesn't override other people using authority he doesn't have, it's hard to see him as underhanded. So the guy who made the decision stage-managed a meeting to dramatize his reasons for deciding as he did -- so what? The guy presenting the slide deck hid his opinion about the deal, but only for dramatic purposes, and only at a point where his opinion had ceased to matter because the exec in charge had already made up his mind.

anonymous246• 15 years ago

wrt "honest, legit reasons" as opposed to selfish ones: the deal was scuttled by a person partly in charge of Google VOICE, which would have surely gotten killed if Google had bought Skype. Looks pretty selfish to me.

This is a very revealing article. Google is more dysfunctional than I thought.

trustfundbaby• 15 years ago

I'm not convinced ... I still think Skype would have been the missing piece of the puzzle for google voice, that would have taken it from where it is now (nice-to-have) to a must-have/must-use like youtube is today.

But that's just me.

jellicle• 15 years ago

Wesley Chan sounds like someone who needs to be fired immediately, if not sooner.

yalogin2• 15 years ago

I absolutely do not understand what he means by p2p using more bandwidth. I think he is lying. Google will not get the thing it most covets - data. So it cannot sell ads on skype as all data will be shuttled through peer systems instead of Google servers.

Hipchan• 15 years ago

p2p uses more bandwidth in a multi-user scenario. Don't think that's an invalid point.

yalogin2• 15 years ago

I doubt that actually. Done right the bandwidth used should be less than in a client-server model. The idea is that the peers talk to each other directly and the data does not have to go all the way to the server and back. But I guess I was trying to say that he is not stating the real reason behind the decision.

gabriele• 15 years ago

I believe that very little of the MS/Skype deal is about the technology behind Skype. With 8.5 billions Microsoft could have developed the same technology or even a better technology, and it's very likely that they will completely change it in the future to better integrate Skype with their other products. The real value of Skype is in its user base and the significant number of companies that use Skype as a valuable business resource. That is potentially a much more profitable user base than that of Live Messenger and the two products together now represent a large majority in the entire instant messaging marketplace.

kragen• 15 years ago

Holy shit, Google may not Be Evil, but Wesley Chan surely is:

"As Chan helped with due diligence, even going to Europe to see Skype firsthand, he became convinced that the purchase was a bad idea for Google. He concluded that one of Skype's key assets -- its peer-to-peer technology -- was a mismatch for Google, which worked on the newer paradigm of cloud computing.

"'The worst thing about peer-to-peer is that it doesn't work well with Google,' Chan told me during an amazing interview for 'In the Plex' in February 2010. 'Peer-to-peer just eats up your bandwidth, right, it's like the old technology.'"

Apocryphon2• 15 years ago

See, I don't get that. Perhaps his tactics were rather quiet, but he's just an employee who sees a possible acquisition as a dangerously expensive mismatch. All this shows is that he did his homework and worked hard to make sure it wouldn't happen. What's evil about that?

ChuckMcM• 15 years ago

Wow, thanks for that link.

If anyone ever wants to know why I don't work at Google any more and why I would decline their offer if they asked me to come back, I would point to this example.

If you thrive in that kind of environment where you "plant hand grenades so you can de-rail the deal" by all means go there. I don't. Every place in Google I looked at had this sort of culture.

netpenthe• 15 years ago

how many people use Skype just for the IM? I find it vastly superior to all other chat clients....

zaidf• 15 years ago

I wish Google bought Skype just so I could find and search archives of my conversations in my gmail. It is incredibly hard to believe how skype survives without online chat log archiving. I find it almost essential for business-related work.

qq66• 15 years ago

Reminds me of how Humphrey would operate in "Yes Minister."

Why Google Does Not Own Skype

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