NEW YORK (AFP) – US software giant Microsoft will buy Internet phone service company Skype for $8.5 billion dollars, the companies announced on Tuesday.


"Skype is a phenomenal service that is loved by millions of people around the world," said Microsoft chief executive Steve Ballmer in a statement.

"Together we will create the future of real-time communications so people can easily stay connected to family, friends, clients and colleagues anywhere in the world."

Microsoft said Skype will become a new business division within Microsoft, and that Skype CEO Tony Bates will assume the title of president of the Microsoft Skype Division, reporting directly to Ballmer.