So Long Skype, Hello MSN-Yahoo!

A deal was struck between MSN and Yahoo! to link their different IM communities for interoperability. The two companies are #2 and #3 in the IM market behind leader AOL. No doubt the deal was spurred by the appearance of Skype and Google on the IM/instant voice scene. But the deal is a natural, since islands of IM communication are more of a short-term anomaly than a permanent fixture. (See Mike’s history of IM interop squabbles on the main Techdirt site.) Metcalfe’s law tells us that we receive exponential benefits by connecting our communication networks, so in so doing, Microsoft and the Yahoos will provide a far more useful product – and can hope to reap some financial rewards. (I wonder if the two are charging interconnect fees, or if there is any money changing hands…) Regular telcos should feel threatened, but the big loser is eBay and their Skype division. How is Skype going to compete long term against these massive portals with millions of loyal customers, as they start to interconnect and offer voice services that rival Skype’s, as well as a whole lot more? We’ve talked about the threat of the IM companies over Skype in the past.

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