Ouch. Sorry to kick a dead horse, but I'm not sure what exactly EBay was thinking when they bought it... solving fraud by letting people talk to each other? Really? I suppose it's something which might have seemed good in a meeting of people none of whom cared much about thinking it through.
Part of the drivers for eBay was that Skype was at the time (apparently) responsible for something like 90% of paypal signups (especially outside of established markets like the US).
I think they were worried that if Skype had been purchased by Google, and they switched to using Google Checkout rather than paypal, that they would have lost a lot of market share.
Wow, 90% seems like a lot... although I can't seem to find a source for that. According to an answer on Amazon's askville [1], the total ended up being ~1.7% around Oct 2006.
At one time, the life cycles of the companies might have aligned (as Skype was taking off, and Paypal was plateauing) to show ridiculous numbers like that. Still, it seems hardly justifiable to pay billions to buy a company just because they use your service for checking out.
Worse what they bought was a name based upon technology they don't own. Someone just figured out that they can't move on and take it to the next level and are dumping it. Mistakes happen, they should have bought everything not just the pretty outside and user base.
From what I remember at the time, eBay had a ton of cash and was being pushed to make acquisitions. The whole idea of using it as part of their auctions was ludicrous. Their either don't understand their customer base or were purely talking BS.
