Summarize this content to 2000 words in 6 paragraphs
A meeting in Skype, the messaging and calling app that once ranked as Microsoft’s largest acquisition. (Microsoft Photo)
Before Zoom, before FaceTime, and before video-calling became a default feature of today’s messaging apps — there was Skype.
Microsoft paid $8.5 billion in 2011 to acquire what was once a dominant player in voice and video calls over the internet. But conflicting internal development efforts and tough competition have taken their toll.
And now, more than two decades after it launched, Skype is hanging up.
Microsoft confirmed Friday that it is officially retiring Skype in May and consolidating its consumer communication services into Microsoft Teams.
Skype users will be able to migrate to Teams by logging into Teams with their Skype credentials to access their chats and contacts. Those who do not migrate can export their Skype data, according to a blog post from Microsoft.
“Skype has been an integral part of shaping modern communications and enabling countless meaningful moments, and we are honored to have been part of the journey,” wrote Jeff Teper, president of Microsoft 365 Collaborative Apps + Platforms.
The company had planned to announce the news next week, before it leaked Thursday night, through a message about the transition in the underlying code for the latest Skype for Windows preview.
There are no headcount reductions associated with the change at this time, according to a spokesperson. Employees working on Skype will continue to work on Teams.
Founded in 2003, Skype was acquired two years later by eBay for $2.6 billion. eBay sold a majority stake to investors in 2009, and Microsoft bought the company in 2011.
At the time, it was Microsoft’s largest acquisition, and remains its fourth-largest deal behind Activision Blizzard ($68.7 billion, 2023), LinkedIn ($26.2 billion, 2017), and Nuance ($19.7 billion, 2021).
Microsoft already had technology similar to Skype’s services for video calling and messaging. But it was betting that Skype’s popularity would help the tech giant find its footing online.
Skype was synonymous with video calling at the time. It had an iconic ringtone, and “Skyping” became a common verb, much like “Googling” — a status coveted by tech companies. The brand appeared frequently in pop culture and media.
“Skype is a phenomenal product and brand that is loved by hundreds of millions of people around the world,” Steve Ballmer, Microsoft’s CEO at the time, said in a news release announcing the completion of the acquisition.
Microsoft would go on to integrate Skype into its ecosystem, including Windows, Xbox, Outlook, and Office. This continued as recently as last year, when Microsoft integrated AI-powered Bing into Skype.
However, the company also maintained its Lync messaging, calling, and video-conferencing service for businesses for several years after the acquisition, diluting its efforts and keeping it from building a stronger, unified brand.
Eventually, the company turned Lync into Skype for Business. But technical struggles and a flurry of competitors, such as WhatsApp, also contributed to Skype’s downfall. Microsoft announced plans to retire Skype for Business in 2017 and replace it with Teams, which it had unveiled earlier that year.
Skype had 40 million daily active users in March 2020, when Zoom’s video conferencing tools began attracting wide adoption amid the pandemic.
Overall Microsoft Teams usage reached 320 million monthly active users in December 2023.
