Google pays $30M for Gizmo5; Did the search giant just blow up the phone biz?

Search giant Google (GOOG), which looks increasingly like a phone company, paid $30 million for Gizmo5, the Web-based calling startup, DailyFinance has confirmed with people familiar with the matter. The deal is done and the startup's staff has begun work integrating into the Google Voice team in Mountain View, Calif.

Skype was also in negotiations to buy Gizmo5 before the VoIP (voice over Internet protocol) giant's founders reached a settlement to re-take an ownership stake in the company. TechCrunch first reported the news earlier this week. The deal is a crucial step for the search titan because Google Voice now gains the technology to connect inbound and outbound calls to standard land-lines and cell phones, something it had lacked.