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Google and Skype Are Friends?!

Posted by: Olga Kharif on February 6, 2006

On Feb. 6, Skype, Google and two well-known vc firms announced that they will jointly invest $21 million into a start-up called FON. FON is, essentially, trying to do what a number of earlier upstarts had failed at — monetizing on offering Wi-Fi services. FON’s idea is simple: It’s inviting people with home Wi-Fi networks to participate in its Wi-Fi hotspot sharing program. If you allow other members to hook onto your home Wi-Fi network, you can use all of FON’s hotspots — and FON expects to have some 1 million of those by 2010 — for free. Where the money is made is in co-called “alien” memberships, where people who don’t own Wi-Fi networks pay to use FON.

This announcement carried two surprises for me. One, Google is going after providing Wi-Fi service. Sure, we’ve all heard about how the search giant is trying to get approval to build a city-wide Wi-Fi network in San Francisco. But, just a week ago, Google told me it didn’t really have Wi-Fi plans beyond that. Clearly, that’s not so. And the long-standing speculations that Google is going to try and start competing with telcos is slowly but surely coming true.

Two, I was surprised that Google and Skype are banding together on this. I mean, the two companies are fierce rivals — expected to increasingly step onto each other’s toes in the coming months. Google’s upcoming VoIP service, Google Talk, is a direct competitor to Skype. Google’s upcoming classifieds service, Google Base, is a direct competitor to Craig’s List, an online classifieds service in which Skype’s owner, eBay, is an investor. Talk about an unlikely partnership!

I wonder if this means that the two companies are, perhaps, exploring a long-ranging partnership agreement. Perhaps, eventually, Craig’s List and Google could band together against the likes of Microsoft on classifieds? Perhaps Google and Skype will make their VoIP services interoperable, to compete with the likes of Yahoo and Microsoft? What do you think?

Reader Comments

Al-Noor Ramji

February 6, 2006 5:08 PM

I think this is a very sensible attempt by Google to learn about a potential business without taking undue risk or spending a large amount of money. Also saving management bandwidth this way.
In the long run I doubt they really want to be in the Telco business per se. There must be leverageable opportunities for them beyond the simple.


February 7, 2006 12:38 PM

Nothing here is surprising. Of course Google has WiFi plans, what is their alternative if they are looking seriously at Mobile? Get the internet on to all the devices, then have everyone go through Google when there (even Skype'ers need to search...)

And Google and Skype have much, much more to gain from the success of the FON plan than they do from 'beating' each other now. That doesn't mean at all that they will go any further together - one date doesn't mean a wedding.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.



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