Why Google might be in the Skype business

There's a not-so-outlandish rumor going now that Google might acquire Skype from eBay.

There are multiple reasons why Skype would make a good addition to the Google portfolio... which is good because there weren't any good arguments for the eBay acquisition. I'm particularly interested in two of those reasons: one makes sense if you take Google's "don't be evil" code of conduct statement on face value, and another if you think of Google as the scheming Dr. Evil of the technology space.

In the Don't Be Evil scenario: the relevant ingredients are these:

• Linux-based Skype client
• Linux-based Android mobile OS (the so-called "Google Phone")
• Open-access to 700 MHz wireless bandwidth or white space spectrum
• Grand Central (Google acquisition in July 2007)
• Goog-411

Mix it all together and you can offer consumers a carrier-free (or at least carrier-independent) mobile phone-and-gadget solution that does voice, with plenty of free add-on services. Google would run Skype's client on their Android OS platform, partnering with a big name carrier like ATT or VZN (or both!) for high-speed wireless data, but not for voice service. Mix in Grand Central for managing your voice life and messaging, and throw in free Goog-411 to make users' lives easier.

This is the scenario many pundits see as the crowning logic on the transaction.

However, there is a Doctor Evil scenario to consider as well.

• Skype service in its current form as a PC-based voice & video client
• Voice-to-text analysis software added into the Skype client
• Google AdSense
• Double-Click (Google acquisition completed March 11 after FTC and EC review)

In this scenario, Google has software in the Skype client which monitors your conversations, listening for keywords it can use to assign you into marketable/targetable "segments", which would be transmitted back to Google. This now creates another way, besides just your day-to-day browsing habits, for Google/Double-Click to target you for optimal ad-delivery. The same segmentation could then also be used with AdSense to deliver text-ads that aren't just based on the content on the page, but also on your current, Skype-determined ad-segments (which capability they're getting anyway in Double-Click, if not via your voice-conversations).

The idea of conversationally-contextual ads was mocked in a recent April Fool's Day joke on the AdSense blog. But the Doctor Evil scenario is much more in keeping with Google's core business than the Do No Evil scenario, and technologically easier for them to implement in the near term. The Do No Evil scenario involves carriers or other provisions for wireless bandwidth, plus completion of the Android platform (which is open), plus handset makers who must provide the devices on which Android will run. That's a lot of messy relationships and agreements. Easier to just acquire the core components you need and go from there.

For both scenarios: if there's anything we've proven over the past 10-12 years, it's
that a pay-for-service model will spiral toward zero revenue if there
is a cheaper/free ad-supported model in competition to it. So
Google-powered voice ads, to go along with free Skype service, targeted
to you based on your browsing (if not your conversations) is not at all difficult to envision.

Get ready for "free" voice service... the most annoying free voice service you could imagine!