Microsoft is shutting down Skype, the video-calling service it acquired for $8.5 billion in 2011. The tech giant announced on Friday that it will retire Skype in May and consolidate its services into Microsoft Teams, its primary platform for video conferencing and team applications. Existing Skype users will be able to use their accounts to access Teams.
For years, Microsoft has prioritized Teams over Skype. This decision reflects the company’s strategy to streamline its core communications app amid growing competition. Skype, founded in 2003 by a group of engineers in Tallinn, Estonia, revolutionized online communication by enabling telephone calls over the internet using Voice over Internet Protocol (VOIP) technology, which converts audio into a digital signal for online transmission. Skype added video calls after eBay acquired the service in 2005.
“You no longer had to be a senior manager in a Fortune 500 company to have a good quality video call with someone else,” said Barbara Larson, a management professor at Northeastern University who studies the history of virtual and remote work. “It brought a lot of people around the world closer.”
This capability to bypass costly international phone calls was advantageous not only for startups but also for individuals outside of the business world. “You could suddenly have long calls, frequent calls, that were either free or very inexpensive,” Larson said.
By 2011, when Microsoft purchased it from eBay, Skype boasted approximately 170 million users globally. Then-Microsoft CEO Steve Ballmer stated at the merger announcement event, “The Skype brand has become a verb, nearly synonymous with video and voice communications.”
Skype was still considered cutting-edge in 2017, when the administration of recently inaugurated President Donald Trump utilized it to address questions from journalists located away from the White House press briefing room. Microsoft launched Teams a month later to meet the rising demand for workplace chat services, spurred by the emergence of rival Slack Technologies.
Platforms such as Slack and Teams, along with newer video platforms like Zoom, experienced explosive growth during the COVID-19 pandemic. Companies quickly transitioned to remote work arrangements, while families and friends sought new tools for virtual gatherings. Skype, although declining at this time, still paved the way for the enhanced connections that people could build remotely.
“Higher-quality media can really deepen relationships and make people able to work through complex problems much better,” Larson noted. “Suddenly, this was available to anyone with a decent internet connection. And that was the real sort of revolutionary role that Skype had.”
