Microsoft has announced it will spend $8.5 billion to buy the Internet phone service Skype, one of the largest deals in the computer giant's history.

Purchasing Skype would give Microsoft access to nearly 170 million users who login to Skype every month. The service would be accessible on Microsoft's Xbox game console, Outlook email program, and Windows smart phones.

"By bringing together the best of Microsoft and Skype, we are empowering people around the world with new technologies that bring them together," Microsoft Chief Executive Steve Ballmer said.

Skype allows free calling services via the Internet as well as discounted international phone calls. Users made 207 billion minutes of voice and video calls last year.

Microsoft said Skype will become a new business division headed by Skype CEO Tony Bates.

The corporate deal is one of many that has propelled stocks in recent months, including AT&T Inc.'s buyout of T-Mobile USA and Johnson & Johnson's deal to acquire the medical instrument company Synthes.