Skype signs off: How Microsoft’s video platform went wrong as others zoomed by

Skype (MSFT0.00%) is chirping its last goodbye.

Its parent company, Microsoft, announced on Friday that Skype will be going offline for good on May 5, 2025. The tech giant is instead pivoting all its focus to Microsoft Teams, which has many of the same core features as Skype but is geared towards businesses rather than consumers.

Effective immediately, Microsoft will cease Skype’s paid offerings such as credits and subscriptions. Existing Skype users can use their accounts to log into Teams over the coming days if they wish to automatically transfer over previous chats and contacts. And until the May deadline, Teams and Skype users will be able to call and chat with each other.

In its heyday, Skype was the leading video communication tool, so much so that the brand name acted as a verb for video chatting. So how did Skype lose its crown while relative newcomers, like Zoom (ZM0.00%), enjoyed atmospheric rises in popularity?

Skype’s fall can be traced back to Microsoft’s acquisition in 2011, experts from New York University’s Stern School of Business told Quartz.

Skype was founded in 2003 by Nordic entrepreneurs and a small team of Estonian developers. It was acquired first by eBay (EBAY+1.26%) in 2005 and then by Microsoft in what was the software giant’s largest acquisition at the time.

“Microsoft wanted to have an integrated messaging system of text, voice and video for a long time,” said NYU Stern professor of entrepreneurship Arun Sundararajan.

Microsoft first tried to build it itself with Office Communicator, which later turned into Lync, before re-debuting as Skype for Business post-acquisition. This was a separate platform from the original Skype, whose consumer base was its primary strength.

“The business market and the consumer market are very different,” Sundararajan said.

With the social media boom, widespread adoption of smartphones and the explosion of messaging apps such as Snapchat (SNAP+1.95%) and WhatsApp (META+0.42%) 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.

Skype might’ve helped the tech giant do just that, Sundararajan said, but ultimately there was a mismatch between Skype’s consumer base and Microsoft’s competencies 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 have Skype compete with other consumer-facing products to little success, such as in 2017 when Skype debuted an ill-received user interface with “highlights” that mirrored Snapchat’s popular “stories” feature.

Then, video-chat features appeared inside popular texting platforms, such as Apple’s (AAPL+0.89%) 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, passing the baton to the arguably more successful Microsoft Teams, which was already integrated into the Microsoft Office Suite.

Skype and its business counterpart were competitors under the umbrella of the same parent