It’s official — Skype will become part of the Microsoft family. The service, that connects millions via Internet-based telephony and video, will provide Microsoft with what the Wall Street Journal describes as “a recognized brand name on the Internet at a time when it is struggling to get more traction in the consumer market.”

The deal — the biggest in Microsoft’s 36-year history — was closed late on Monday, knocking out the prospect of a Skype public offering as well as talks with other interested parties such as Google, Facebook and Cisco.

The $8.5 billion price tag is three times what Skype earned 18 months ago (when eBay sold it to a group of investors), and is clearly a sign of how ambitious Steve Ballmer and Microsoft Corp. are for new growth opportunities in the mobile phone and Internet markets.

Consumers should expect to see Skype integration with products including the Xbox gaming console and Office software suite; however, Ballmer said the service will continue to be available for Apple devices and others running Google software.

Skype was launched in 2003 by Niklas Zennstrom and Janus Friis, the two pioneers behind Kazaa file-sharing technology. Today, Skype has more than 170 million active users worldwide.