Facebook launches video chat with Skype

Facebook will integrate free Skype video chat into its service as it looks to cement its role as a communications hub and drive back Google Inc's foray into online social networking.

The agreement -- announced by Facebook Chief Executive Mark Zuckerberg at the company's headquarters in Palo Alto, California, on Wednesday -- deepens the company's cooperation with Microsoft Corp, which is in the process of buying Skype to build up its Web presence.

Zuckerberg said Facebook has hit a record 750 million users. The new service, rolling out from Wednesday, could be a huge boost for Skype, which currently has about 145 million regular users.

"This is opening up a whole new user base for Skype," said Kim Caughey Forrest, senior analyst at Fort Pitt Capital Group. "The core of Skype users are people that have extraordinary circumstances -- they have a computer but no money, or they have friends and family on a different continent. This could ultimately grow the number of Skype numbers that use it within the United States."

The service, initially limited to one-to-one video chat, will be free. Financial details of the deal, if any, were not disclosed.

Tony Bates, Skype's Chief Executive, said Wednesday's deal with Facebook is only the start of a potentially lucrative partnership.

"For us, this makes a lot of business sense," Bates said at the Palo Alto event. "We get huge reach. In the future, we're talking about potentially also having Skype paid products available within the Web format we saw here today."