Skype is shutting down in May: Microsoft pulls the plug after 22 years—Was its $8.5 billion bet a failure?

Microsoft is officially shutting down Skype in May 2025, ending a service that once defined internet calling. The company, which bought Skype for $8.5 billion in 2011, is shifting users to Microsoft Teams, a platform built with business collaboration in mind.

A report from XDA reveals that Microsoft has added a message in the latest Skype for Windows preview stating, “Starting in May, Skype will no longer be available. Continue your calls and chats in Teams.” The message is accompanied by a notification showing how many of the user’s contacts have already made the switch to Teams.

The decision has sparked mixed reactions. Some are reminiscing about Skype’s early days when it made international calls free, disrupting phone companies. Others see this as the latest example of Microsoft struggling to make the most of a big acquisition.

A $8.5 Billion Bet That Never Paid Off

Skype took off in the early 2000s as a simple way to connect with friends and family without paying long-distance fees. eBay saw potential and grabbed it for $2.6 billion in 2005. That deal flopped, and a few years later, a group of investors led by Silver Lake took control. Microsoft stepped in and paid top dollar, expecting Skype to be its future in communication.

The plan never really worked. Microsoft tried pushing Skype everywhere—bundling it with Windows, integrating it into Outlook, and later, adding AI tools like Bing Chat. Nothing stuck.

The Rise of Better Alternatives

Skype’s biggest problem was competition. By the time Microsoft figured out what to do with it, new players had already taken over.

When the pandemic hit, Zoom became the go-to for video calls. WhatsApp made group chats seamless. Slack redefined workplace messaging. Even Microsoft’s own Teams became a stronger alternative.

“Skype is still seen primarily as one-to-one,” said Jim Gaynor, a research vice president at advisory firm Directions on Microsoft, in a CNBC interview. That’s a tough spot to be in when most people need tools built for group conversations.

Skype’s user numbers tell the story. Microsoft reported 40 million daily users in early 2020. That number has since dropped to 36 million. Teams, meanwhile, jumped from 250 million monthly users in 2021 to over 300 million.

Not Gone Just Yet

Skype isn’t disappearing overnight. A Microsoft spokesperson confirmed it will remain available for those who still use it. But with Teams getting all the attention, it’s clear where things are headed.

Jaan Tallinn, one of Skype’s founding engineers, still uses it as his default. “If people want to use some other channel, then I’m happy to comply,” he said.

Microsoft may not call it a failure, but it’s hard to look at Skype’s journey and see anything else. The app that changed online communication is now being phased out, replaced by something Microsoft built after the fact.