Microsoft is pulling the plug on Skype. The video platform is set to go offline for good on May 5, 2025, according to an announcement made on Friday. The company is putting all its resources into Microsoft Teams, which has many of the same basic features as Skype, but is aimed at businesses rather than individual consumers.
Microsoft is immediately discontinuing paid Skype services, including credits and subscriptions. Current Skype users can use their accounts to log into Teams to transfer their chats and contacts. Until the May deadline, users of both platforms will still be able to communicate with one another.
Once the leader in video communication, the brand name “Skype” became synonymous with video chatting. But what happened? How did Skype lose its dominance while platforms like Zoom saw their popularity soar?
Experts at New York University’s Stern School of Business, told Quartz that Skype’s decline can be traced back to Microsoft’s 2011 acquisition of the platform.
Skype was originally founded in 2003 by a small group of Estonian developers and Nordic entrepreneurs. Ebay acquired it in 2005 before Microsoft took over in what was the software giant’s biggest acquisition at that time.
“Microsoft wanted to have an integrated messaging system of text, voice and video for a long time,” said Arun Sundararajan, NYU Stern professor of entrepreneurship.
Microsoft initially developed the system itself with Office Communicator, later rebranded as Lync. It was then relaunched as Skype for Business after the acquisition. This was a separate platform from the original Skype, whose consumer base was its main advantage, according to experts.
“The business market and the consumer market are very different,” Sundararajan said.
With the boost in social media, the widespread adoption of smartphones, and the rise of messaging apps such as Snapchat and WhatsApp in the early 2010s, the “locus of competition for tech shifted from being business-centric to being consumer-centric and Microsoft, as a specialist in the business market, had to adjust,” he added.
Sundararajan said Skype may have helped the tech giant in that shift, but there was ultimately a mismatch between Skype’s consumer base and Microsoft’s expertise in the business market.
“I think that a lot of Skype’s journey post-2011 was driven by it not being squarely positioned as a business product,” Sundararajan said. Instead, Microsoft tried to compete with consumer-facing products with limited success. For instance, Skype released an unpopular user interface in 2017 with “highlights” that mimicked Snapchat’s popular “stories” function.
Also, video-chat features came to be integrated within popular texting platforms, like Apple’s FaceTime and Meta’s WhatsApp.
“For a lot of people, there was an extension of an existing product that they were using that started to offer high quality video-calling and as a consequence the standalone value of having a separate app that they used to associate with video-calling went down,” Sundararajan said.
Microsoft eventually discontinued Skype for Business, moving to Microsoft Teams, which was incorporated into the Microsoft Office Suite.
Skype and its business counterpart were competitors under the same parent company. “It is unlikely that two similar platform products would coexist nicely,” NYU Stern professor of management communication Jeffrey Younger told Quartz.
At the same time that Skype was struggling to compete with social media and messaging apps, Zoom was building its own product. Then, when the pandemic hit and the need for video-conferencing greatly increased, Zoom already had the product with the better end-user experience.
Zoom was easier to adopt and use, and the service made screen-sharing straightforward. People began using Zoom due to network effects, a pattern where people start using a platform simply because everyone else is.
“It’s possible that had COVID hit four years earlier in 2016, Skype may have ended up being the dominant platform,” Sundararajan said.
“The lesson is to be judicious about where your strengths lie, and the extent to which you can compete in markets that don’t play to your strengths,” he added. “And timing really is everything.”
