Microsoft to shut down Skype in May after nearly two decades

Online auction site eBay acquired Skype in 2005 for approximately $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.