Microsoft eyeing Skype

Microsoft is in advanced talks to acquire Skype, which revolutionized telephone calls over the Internet, for $8.5 billion, including the assumption of debt, according to people involved in the transaction.

A deal is expected to be announced on Tuesday morning, these people said, although they cautioned that negotiations could still fall apart.

The acquisition would be Microsoft’s largest ever and it is the software giant’s effort to gain a foothold in the world of voice and video communications. Microsoft would be able leverage Skype’s more than 600 million registered users into using its other Internet products like Bing, its search engine, which competes with Google. It may also be used to bolster Microsoft’s fledging mobile telephone offering, which lags far behind Apple’s iOS and Google’s Android operating systems. And Skype is likely to integrated into Microsoft’s flagship product, Office, as a way for business users to better collaborate.