Microsoft is planning to retire Skype, the video-calling service it acquired in 2011 for $8.5 billion. The decision reflects the company’s strategy to streamline its communications offerings by focusing on Microsoft Teams, its primary videoconferencing and team applications platform.
Founded in 2003 by a group of engineers in Estonia, Skype was a pioneer in internet-based telephone calls, relying on Voice over Internet Protocol (VoIP) technology. The service later incorporated video calls after being acquired by online retailer eBay 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.”
Skype facilitated global connections by bypassing expensive international phone calls, benefiting startups and individuals alike. Larson noted, “You could suddenly have long calls, frequent calls, that were either free or very inexpensive.” However, its ease of use also attracted scammers.
By 2011, when Microsoft bought Skype from eBay, the service had approximately 170 million users worldwide. Then-CEO Steve Ballmer highlighted the brand’s impact, stating, “The Skype brand has become a verb, nearly synonymous with video and voice communications.”
Even in 2017, Skype was still considered high-tech, being used by the Trump administration to field questions from journalists remotely. However, Microsoft launched Teams a month later to compete with workplace-chatting services, like the growing popularity of Slack Technologies.
The COVID-19 pandemic accelerated the adoption of platforms like Slack, Teams, and Zoom, as remote work and virtual gatherings became widespread. While Skype’s influence waned during this period, its legacy lies in creating stronger remote connections.
Larson explained, “Higher-quality media can really deepen relationships and make people able to work through complex problems much better. Suddenly, this was available to anyone with a decent internet connection. And that was the real sort of revolutionary role that Skype had.”
