Skype was sold three times for billions before Microsoft switched it off
Skype got its name because a domain was taken. Its founders wanted Skyper, from sky and peer-to-peer, but the web addresses were gone, so they dropped the last letter. Over the next 22 years the service changed hands three times, reaching a Microsoft price of 8.5 billion dollars before being shut down.
The idea came from a Swede, Niklas Zennström, and a Dane, Janus Friis, while four Estonian engineers, Ahti Heinla, Priit Kasesalu, Jaan Tallinn and Toivo Annus, wrote the software. Friis and Annus are credited with the key insight: cut the cost of voice calls by routing them peer-to-peer between users' own computers, borrowing the approach of the file-sharing program Kazaa. The first public beta appeared on 29 August 2003, and Estonia remained its engineering heart; in 2011 most developers still worked in Tallinn and Tartu.
Money followed fast. In 2005 eBay agreed to buy Skype for roughly 2.5 billion dollars upfront, but the fit with an auction site never became obvious. In 2009 eBay sold 65 per cent to a group of investors including Silver Lake and Andreessen Horowitz for 1.9 billion dollars. Then in May 2011 Microsoft paid 8.5 billion dollars and used Skype to replace its own Windows Live Messenger, later folding the business product Lync into it too.
Usage climbed for years. Skype had over 660 million registered users by the end of 2010, and simultaneous logins kept breaking records, passing 50 million in January 2013. In 2017 Microsoft moved it off the peer-to-peer design onto central Azure servers. That same year, a Snapchat-style redesign was widely disliked and eventually withdrawn.
The pandemic brought a last surge, with daily users up 70 per cent in a single month in early 2020, but Zoom captured much of the new demand, and Microsoft's own Teams won over business customers. Daily use slipped to 36 million by 2023. Microsoft retired Skype on 5 May 2025, pointing users to the free version of Teams.
Source: Skype
