Facebook and Skype in video chat deal

Facebook founder Mark Zuckerberg announced the deal with Skype at a news conference [GALLO/GETTY]

Facebook will soon add Skype video chat as a new feature, aiming to add appeal to the world’s already most used online social networking service while fending off increased competition from Google.

The agreement between the two companies was announced by Facebook founder, Mark Zuckerberg, at the company’s California headquarters on Wednesday, deepening the company’s relationship with Microsoft Corp, which is in the process of buying Skype to build its web presence.

Zuckerberg said Facebook has hit a record 750 million users. The new service could be a huge boost for Skype, which currently has about 145 million regular users.

The partnership comes as competition heats up in online social networking market, with Facebook and Google, as well as fast-growing companies such as Groupon and Twitter, vying for billions of dollars in online advertising revenue.

Facebook’s Skype service, initially limited to one-to-one video chat, will be free. Financial details of the deal, if any, were not disclosed.

Tony Bates, Skype’s chief executive, said Wednesday’s deal with Facebook is only the start of a potentially lucrative partnership.

“For us, this makes a lot of business sense,” said Bates. “We get huge reach. In the future we’re talking about potentially also having Skype paid products available within the web format we saw here today.”

In a phone interview later on Wednesday, Neil Stevens, the general manager of Skype’s consumer business, said the company was planning on introducing a for-pay service that would allow users on Facebook to place calls to landline and mobile phones.

Stevens said he could not provide a timeframe for when such a service might be available.

Returning fire

Facebook, which also unveiled a group messaging function is returning fire from Google, which last week announced its newest social networking competition, dubbed “Google+”.

While many of Google ‘s social networking features are similar to those already available on Facebook, Google is generating interest with its video-conferencing function, which allows up to 10 people on the service to participate in a video call.

Zuckerberg hinted that video chat for multiple people could eventually be available on Facebook. But he said that most video chats today occurred between two people anyway.

“We think this is awesome because we’re using the best technology that’s out there for doing video chat with the best social infrastructure that’s out there to create some really cool new scenarios,” said Zuckerberg.

Zuckerberg said Wednesday’s announcements were the first of several to come in what he described as “launching season 2011”.

Facebook’s new Skype feature will likely benefit Microsoft, which owns 1.6 per cent of Facebook and announced its $8.5bn purchase of Skype in May.