Why Microsoft Discontinued Skype After Spending $8.5 Billion On It

Skype was a revolutionary video-conferencing platform that paved the way for apps like Zoom, Google Meet, and WhatsApp. For those unaware or who don't recall, Microsoft purchased Skype back in 2011 to the tune of $8.5 billion — the company's largest acquisition at the time. But in May 2025, Microsoft pulled the plug on what used to be one of the go-to platforms for telecommunication. The main reason why the Windows empire decided to abandon Skype? The advent of Microsoft Teams.

Officially launched in 2017, Teams hit the market to take on Slack, but many of Skype's core features were also rolled into the Teams architecture. Video calls and instant messaging were Skype's bread and butter, but Teams had file sharing and deep Office 365 integrations added to the fold which made Skype start to feel outdated pretty quickly. Once COVID-19 reared its ugly head, the world was in dire need of reliable video-conferencing tools.

Enter the likes of Zoom and other competitors who were able to seize the moment while Skype barely made a dent. The writing had been on the wall for a while, though. Once Microsoft used Skype to replace Windows Live Messenger in 2012, the company didn't do much to keep Skype relevant or user-friendly.

Not long after Microsoft's 2011 acquisition of Skype, the company began shifting the focus from user-friendly software designed to chat with friends and family toward a more business-driven demographic. Microsoft also did a lot to change the look and feel of Skype's once-friendly UI, a move that failed to resonate with Skype's core users. Social media features and frilly add-ons like GIFs and Mojis added unnecessary bloat to the Skype interface.

Microsoft also began integrating Skype into services like Facebook, Outlook, and Xbox — a move that further complicated the software's identity as it tried to be everywhere and everything (while essentially failing at all of it). Then came the UI death knell of 2017, when Microsoft tried to rebrand Skype to be more appealing to younger users by essentially copy-pasting the heck out of Snapchat.

Longtime users hated the changes and Zoom was more than happy to shepherd those jumping the Skype ship onto its software. The latter was just so much easier to use and video conferencing worked like a charm, a feat once cornered by Skype in its heyday.

By the late 2010s, Skype had become notorious for performance issues, with dropped calls and lag becoming all too common. Even though Skype still had 400 million users by the time the pandemic rolled around, by 2023 that number had dropped to 336 million – at a time when video-conferencing had never been more in-demand.

Skype's final years were certainly its saddest. As Father Microsoft put all its eggs in the Teams basket, Skype's easier-to-use competitors quickly rose to the top of the marketplace. Consumers began flocking to mobile apps like Facebook Messenger and FaceTime; businesses started migrating to Zoom, Slack, and Teams; and community users shifted to services like Discord. Skype had been left in the dust. Primarily because of a failure to modernize, but also due to a failure to be recognized by its parent company (Microsoft's favorite child was clearly Teams).

By the time Microsoft officially announced the death of Skype in 2025, the once-renowned service had become a ghost of its former self — a cautionary tale about how the tech landscape can change overnight. What began as a legendary app that connected families across continents and made "video calling" a household term ultimately lost its identity in the race to stay relevant.

Microsoft has decided to keep the Skype Dial Pad around via the Skype web portal and as part of Teams Free, but Skype, as it was, is simply no more. They say you can't teach an old dog new tricks, an adage that Microsoft seemingly clung to when neglecting its $8.5 billion investment.