LEADING THE DAY: Microsoft has completed a deal to acquire Skype for about $8.5 billion, including debt, All Things Digital reported. The deal was formally announced Tuesday morning. The partnership gives Microsoft a way to compete with Google’s Voice service and Apple’s Facetime platform.

Skype’s internet telephone service will reportedly be integrated with Microsoft’s Kinect gaming accessory and Windows Live.

Mobile privacy hearing: Representatives from Apple and Google will speak about their policies on handling consumers’ personal information before the Senate Judiciary’s privacy subcommittee on Tuesday morning. The subcommittee, chaired by Sen. Al Franken (D-Minn.), will ask the companies for a clearer explanation of their privacy policies, particularly regarding location data and how personal information is shared with third parties.

The hearing follows uproar over a file on the iPhone that appeared to contain tracking data. Apple has clarified that the file was a part of a larger, crowd-sourced location database — not a tracking file — and says it has fixed bugs in its operating system that store the data for up to a year.

Google planning cloud music service: Google is expected to launch a cloud-based music locker on Tuesday, The Wall Street Journal reported, competing with a similar service from Amazon. According to the report, Google is planning to move ahead with the launch without securing licenses from major record labels. Record label negotiations are rumored to be slowing down a similar service from Apple. Google’s music locker is not expected to be tied to a music store.

FCC, FEMA launch emergency alerts : Executives from AT&T, T-Mobile, Sprint and Verizon will join officials from the FCC and FEMA to launch a mobile emergency alerts system in Washington, D.C. and New York, The Washington Post reported. The system--called PLAN, which stands for Personal Localized Alerting Network--will push mobile messages about natural disasters, terror attacks or AMBER alerts to smartphone users from these companies.

YouTube expands movie rentals: Google’s YouTube, in a serious bid to compete with Netflix, announced Monday that it has partnered with Universal Studios, Sony Pictures and Warner Bros. to add 3,000 movies to its rental service. Rentals will cost about $4 for new rentals and $3 for older movies. The service is not subscription-based.

VA hires internal blogger: In a push to embrace the Internet, The Department of Veterans Affairs has hired a critical blogger, Alex Horton, to open the agency’s bureaucracy to scrutiny, The Washington Post reports. Horton landed the job after returning from a deployment in Iraq and criticizing the agency on his personal blog.