Oh snap -- the Wall Street Journal reports that Microsoft is close to a $7 billion-plus deal to buy Skype, with the transaction to be announced as early as tomorrow morning. That'll certainly cause some whispers at Google I/O, and not least because both Google and Facebook were recently rumored to be in the running for everyone's favorite VoIP company. Popular as Skype is, it's still a big bet for Ballmer -- that huge price tag makes it one of the biggest acquisitions in Microsoft history, and Skype hasn't exactly been a profit machine in the eight years it's been around. On the plus side, we can see amazing potential for Skype to link up with Xbox Live and Kinect Video Chat, and we would certainly hope that promised Windows Phone 7 Skype client actually arrives as promised this summer. We'll keep an eye on things and let you know if there's confirmation -- stay tuned.
Update: And just like that, our friend Kara Swisher at All Things D says the deal is confirmed and due to be announced tomorrow. Crazy times, indeed.
Update 2: Well, that didn't take long: rumor to official status in roughly 12 hours. Microsoft has confirmed and announced the deal in a press release, and even goes into details. The final sum is $8.5 billion (quite a nice bump from the $2.6 billion eBay payed six years ago), and of course the deal is subject to some regulatory hurdles, which Microsoft and Skype hope to clear by the end of the year. Skype will be made into a new business division at Microsoft, with Skype CEO Tony Bates taking on the role of President of the Microsoft Skype Division, reporting to Steve Ballmer directly.
Together they'll be building Skype support into Xbox and Kinect, Windows Phone, and of course Windows, with new compatibilities for Microsoft's Lync, Outlook, and Xbox Live users to chat with Skypeland. Interestingly, there's no mention of Windows Live Messenger in the press release, so Microsoft might be folding that into this "Skype" of the future (which would make sense). And a sigh of relief for existing Skype users: Microsoft promises to "invest in and support" Skype on non-Microsoft platforms.