Microsoft is reported to have acquired Skype, the telephone calls service over the Internet. The figure is put at $8.5 bn, including the assumption of debt.

Skype declined to comment notes early reports and Microsoft was reported as 'not returning calls.'  With some  663m registered users and most of its services are free. It makes the bulk of its profits from a small fraction of users who pay for long distance calls to telephone numbers.

But despite its popularity, the service has struggled to maintain profitability; in 2010, Skype made $859.8m revenue but recorded a net loss of $7m.

The acquisition is Microsoft’s largest and a bid gain space in the world of voice and video communications. It will be able to access Skype’s registered users, connect to Xbox 360, Kinect and Office as a way for business users to  collaborate better, as well as boosting the search engine Bing and the Microsoft Windows phonescurrently being outnumbered by Android.

Others believed to have been negotiating either an investment or takeover include Facebook, Google and Cisco Systems.