Microsoft retires Skype in favor of Teams

Microsoft on Friday announced it was retiring Skype, the online voice and video call pioneer that the tech titan acquired in 2011.

"Starting in May 2025, Skype will no longer be available," said a post from Skype support on X, directing users to sign into Microsoft's Teams platform for further use of its services.

Skype was founded in 2003 by Scandinavians Niklas Zennström and Janus Friis in Estonia, revolutionizing Internet communication by offering free voice calls between computers and affordable rates for calls to landlines and mobile phones.

Over the years, and as Internet speeds improved, Skype evolved to include video calls, instant messaging, file sharing, and group communication features.

By 2005, Skype had already reached 50 million registered users, demonstrating its rapid global adoption.

Online auction site eBay acquired Skype in 2005 for approximately US$2.6 billion, but the expected synergies never panned out, and in 2009, eBay sold a majority stake to a group of investors, who then sold it to Microsoft.

In recent years, especially after the rise of the smartphone, Skype failed to hold onto its place against new rivals such as Meta-owned WhatsApp and Zoom, as well as Microsoft's own Teams.

"We've learned a lot from Skype...as we've evolved Teams over the last seven to eight years," Jeff Teper, president of Microsoft 365 collaborative apps and platforms, told CNBC.

"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."

The name "Skype" derived from "Sky peer-to-peer," the technology that was fundamental to Skype's original architecture.

The peer-to-peer aspect was crucial as it distributed the network demands across users' computers rather than relying solely on centralized servers, which was a key innovation that allowed Skype to scale rapidly during its early years.