Microsoft has announced that it will shut down Skype, its 21-year-old calling and messaging service, in May 2025.
The tech giant acquired Skype in 2011 for $8.5 billion but struggled to keep it competitive against newer platforms.
Jeff Teper, president of Microsoft 365 collaborative apps and platforms, confirmed this decision in an interview with CNBC on Friday.
“We’ve learned a lot from Skype over the years that we’ve put into Teams as we’ve evolved Teams over the last seven to eight years. But we felt like now is the time because we can be simpler for the market, for our customer base, and we can deliver more innovation faster just by being focused on Teams,” Teper said.
The company is encouraging users to migrate to its free Teams app, marking the end of an era for one of the pioneers of online communication.
Impact on Skype users
As part of the transition, Microsoft will discontinue monthly Skype subscriptions. However, users with Skype credits will still be able to use them within Teams.
Teper acknowledged Skype’s impact over the years in pioneering online audio and video calls, expressing gratitude for its impact over the years.
“This is obviously a big, big moment for us, and we’re certainly very grateful in many ways. Skype pioneered audio and video calling on the web for many, many people,” he said.
Microsoft stated that over the next few days, users will be able to sign into Teams using their Skype credentials, with contacts and chats transferring over automatically. Additionally, Skype users will be able to export their data.
Why Skype declined
Skype’s decline was largely attributed to its underlying technology, which was not optimized for smartphones.
When the COVID-19 pandemic increased the demand for online business calls, Microsoft focused on Teams by integrating it with other Office apps to attract corporate users, who were once a major base for Skype.
What you should know
Founded in 2003 by Janus Friis and Niklas Zennström in Estonia, Skype gained massive popularity in the early 2000s for its low-cost audio and video calling services
- By 2004, the platform had 11 million registered users, and its popularity skyrocketed.
- In 2005, eBay acquired Skype Technologies SA for $2.6 billion, with the user base reaching 54 million at the time. Under eBay’s ownership, Skype continued growing, hitting 405 million users by 2008.
- However, eBay’s leadership saw limited synergy with its core business, leading to a decision to separate Skype.
- In 2009, amid a global recession, eBay planned a Skype IPO but instead sold the service to an investor group led by Silver Lake for $2.75 billion. The IPO plans under the new ownership did not materialize either.
Despite efforts to modernize Skype by incorporating it into Windows and other Microsoft products, the service struggled to compete with more user-friendly alternatives like Zoom and Slack.
