Microsoft is set to retire Skype, the video-calling service it acquired for $8.5 billion in 2011, in May. The company is shifting its focus to Microsoft Teams, its primary platform for video conferencing and team collaboration.
Skype users will be able to access Teams using their existing accounts, according to the tech giant. This decision underscores Microsoft’s long-term prioritization of Teams over Skype, streamlining its main communications application amid growing competition.
Founded in 2003 by engineers in Tallinn, Estonia, Skype was a pioneer in internet-based calling, leveraging Voice over Internet Protocol (VoIP) technology. The service added video calls after eBay acquired it 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 affordability was particularly beneficial for startups and individuals. “You could suddenly have long calls, frequent calls, that were either free or very inexpensive,” Larson noted.
By 2011, when Microsoft acquired Skype from eBay, the platform had around 170 million users worldwide. Then-Microsoft CEO Steve Ballmer highlighted Skype’s ubiquity, stating, “The Skype brand has become a verb, nearly synonymous with video and voice communications.”
Even in 2017, Skype was considered cutting-edge, with the administration of then-President Donald Trump using it for remote press briefings. However, Microsoft launched Teams shortly after, responding to the increasing demand for workplace communication tools driven by Slack Technologies. Teams and Slack, along with newer platforms like Zoom, experienced significant growth during the COVID-19 pandemic, as companies, families, and friends sought virtual communication solutions.
While Skype’s popularity waned, it laid the groundwork for more robust remote connections.
“Higher-quality media can really deepen relationships and make people able to work through complex problems much better,” Larson said. “Suddenly, this was available to anyone with a decent internet connection. And that was the real sort of revolutionary role that Skype had.”
