Microsoft killed an $8.5 billion blunder in 2025
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During Covid, my family struggled with Zoom meetings—some had cameras in awkward places, others couldn’t get their mics working.At that time, I had been using Zoom for some work meetings and some broadcasting. I was also still using Microsoft Teams for certain meetings (most of them with actual Microsoft employees), and I had a few colleagues who insisted on using Google Hangouts, a now-defunct product that never made a major mark.During that period, however, Zoom became the default video conferencing brand for a variety of reasons that may never have come to be had it not been for the pandemic forcing schools, families, and other non-business users to need a videoconferencing solution. I even had one weekly meeting, a recording session for a podcast, that took place over Skype's, Microsoft's second-tier videoconferencing system behind the emerging Teams.You could argue that of all the platforms named above, Skype was the biggest loser during the pandemic as it was a consumer product, not solely a business one like Teams, or even Zoom before it evolved."At the beginning of 2020, Skype controlled 32.4% of the market compared to Zoom’s 26.4%. But, by the following year, Skype dropped to only 6.6%," reported the Verticals podcast.Covid may not have directly killed Skype, but it certainly put a few bullets into its side as it died a slow death.Zoom helped kill Skype"Zoom’s success wasn’t merely a matter of timing. Several key factors helped it outpace competitors like Microsoft Teams, Google Meet, and Skype." according to the Times of Ireland.Simplicity: Zoom’s user interface was clean and intuitive. No complicated logins or software installations were required—users could join a meeting via a web link with no technical knowledge.Reliability: Zoom’s infrastructure handled video and audio better than most competitors, especially under heavy loads. It adapted to varying bandwidths and delivered consistently strong performance.Freemium Model: Offering free 40-minute meetings made Zoom instantly accessible. Schools, families, and non-profits could use the service without upfront costs.Scalability: Whether you were running a one-on-one interview or hosting a 1,000-person webinar, Zoom could adapt.Brand Identity: Much like “Google” became synonymous with internet search, “Zoom” became shorthand for online meetings. Few platforms achieved this branding triumph. Skype was closed in 2025.Shutterstock Microsoft's $8.5 billion mistakeMicrosoft actually has a history of costly mistakes with the biggest arguably being its attempt to take on Apple's iPhone. Nokia’s Mobile Phone Business (2013-2015): Microsoft bought Nokia’s handset business for $7.2 billion (plus $1.6 billion for patent licensing) in hopes of boosting its smartphone presence, Microsoft shared in a press release. Outcome: The acquisition failed to revive Windows Phone, market share continued to collapse, and Microsoft wrote off nearly the entire purchase and laid off thousands of employees, Medium reported. “It was a mistake to begin with,” said Jack Gold, principal analyst at J. Gold Associates. “A monumental mistake. Microsoft had no business being in the cut-throat, low-margin phone business. Who’s making money in phones besides Apple?" Jack Gold, principal analyst at J. Gold Associates, told Computerworld. The Skype purchase, which cost the company $8.5 billion, is widely considered a misstep relative to Microsoft Teams’ successMore Tech Stocks:Nvidia’s China chip problem isn’t what most investors thinkQuantum Computing makes $110 million move nobody saw comingMorgan Stanley drops eye-popping Broadcom price targetApple analyst sets bold stock target for 2026Microsoft, you can argue, was just as culpable as Zoom in killing Skype, because it clearly chose Teams as its biggest bet in videoconferencing."But Microsoft wanted — and still wants — [Teams] to be a Thing People Want To Use, which ultimately led to Skype taking a back seat as its features were gradually cannibalized to improve Teams. In fact, now that Skype has officially been taken out back with a shotgun, Microsoft is actively encouraging users to port their accounts over to Teams," TechRadar's Christian Guyton wrote.Microsoft closed Skype in 2025Microsoft shared a shutdown plan for Skye on its support pages earlier this year.As of May 5, 2025, Skype is retired. This change will impact both free and paid Skype users, but not Skype for Business.Skype users can move to Microsoft Teams Free, which offers many of the same core features and more. Sign in to Microsoft Teams Free on any supported device using your Skype credentials and your contacts and chats will automatically be transferred. You will also receive a notification in the Skype app prompting you to take action to migrate your data. If you don't want to use Microsoft Teams Free, you can export your Skype data.Existing calling and Skype Number subscriptions will continue to automatically renew until April 3, 2025.
The Skype Dial Pad is available to remaining paid users from the Skype web portal and within Teams Free. To transfer your Skype Number, contact your new carrier or learn more here. A brief history of Microsoft owning SkypeIn May 2011, Microsoft announced it would acquire Skype for $8.5 billion in cash, bringing Skype’s global video and voice communications platform into the Microsoft family, according to an SEC filing.Microsoft later completed the acquisition of Skype, integrating it into key Microsoft products and expanding real-time communications across services including Outlook, Xbox, and Windows, according to Microsoft.In 2025, Microsoft retired the Skype consumer service and encouraged users to transition to Microsoft Teams, signaling a strategic shift to focus on Teams’ broader communication and collaboration features, Microsoft shared.Related: US' second-oldest department store chain considers Chapter 11