EBay 'has Skype in its sights'.

INTERNET auction business eBay is reportedly in talks to buy Skype, the two-year-old internet telephony phenomenon, for up to $3 billion ([pounds sterling]1.6 billion, writes Nick Goodway.

Skype, which has attracted almost 50 million people to its free voiceover-internet phone service, declined to comment on the rumours. Ebay was also not saying anything.

Skype has in the past month recruited investment bank Morgan Stanley to raise cash and attracted the attention of Rupert Murdoch's News Corporation, with which it has held talks.

Skype was founded by Swede Niklas Zennstrom and Dane Janus Friis, who also founded the music download system KaZaa. They still own large stakes in the company but have gained backing from venture capitalists Fisher Jurvetson, Index Ventures, Bessemer Venture Partners and Mangrove Capital.

Google recently said it will launch a rival phone service.

It remains unclear why eBay would want to buy Skype.