Skype Technologies (also known as Skype Software, Skype Communications, Skype Inc., and Skype Limited) was a telecommunications company headquartered in Luxembourg City, whose chief business was the development and marketing of the video chat and instant messaging computer software program Skype, and various Internet telephony services associated with it. Microsoft purchased the company in 2011, and it had since then operated as their wholly owned subsidiary; as of 2016, it was operating as part of Microsoft's Office Product Group. The company was a société à responsabilité limitée, or SARL, equivalent to an American limited liability company. Skype, a voice over IP (VoIP) service, was first released in 2003 as a way to make free computer-to-computer calls, or reduced-rate calls from a computer to telephones. Support for paid services such as calling landline/mobile phones from Skype (formerly called SkypeOut), allowing landlines and mobile phones to call Skype (formerly called SkypeIn and now Skype Number), and voice messaging generated the majority of Skype's revenue. eBay acquired Skype Technologies S.A. in September 2005 and in April 2009 announced plans to spin it off in a 2010 initial public offering (IPO). In September 2009, Silver Lake, Andreessen Horowitz, and the Canada Pension Plan Investment Board announced the acquisition of 65% of Skype for $1.9 billion from eBay, valuing the business at $2.75 billion. Skype was acquired by Microsoft in May 2011 for $8.5 billion (~$11.7 billion in 2024). As of 2010, Skype was available in 27 languages and had 660 million worldwide users, an average of over 100 million active each month, and had faced challenges to its intellectual property amid political concerns by governments wishing to control telecommunications systems within their borders. In February 2025, Microsoft announced the shutdown of Skype on 5 May 2025, with the company being dissolved along with it.
History Skype was founded in 2003 by Janus Friis from Denmark and Niklas Zennström from Sweden, having its headquarters in Luxembourg with offices now in Berlin, Frankfurt, Tallinn, Tartu, Stockholm, London, Palo Alto, Prague, and Redmond, Washington. The Skype software was originally developed by Estonians Ahti Heinla, Priit Kasesalu, and Jaan Tallinn, who together with Janus Friis and Niklas Zennström were also behind the peer-to-peer file sharing software Kazaa. In April 2003, Skype.com and Skype.net domain names were registered. In August 2003, the first public beta version was released. One of the initial names for the project was "Sky peer-to-peer", which was then abbreviated to "Skyper". However, some of the domain names associated with "Skyper" were already taken. Dropping the final "r" left the current title "Skype", for which domain names were available.
In September 2005, SkypeOut was banned in China. In October of the same year, eBay purchased Skype for $2.6 billion. (In 2011, the Ars Technica estimated the purchase price at $3.1 billion, not $2.6 billion.) In December 2005, videotelephony was introduced.
In April 2006, the number of registered users reached 100 million. In October 2006, Skype 2.0 for Mac was released, the first full release of Skype with video for Macintosh, and in December, Skype announced a new pricing structure, with connection fees for all SkypeOut calls. Skype 3.0 for Windows was released. In 2006, a feature called "Skypecasting" was introduced as a beta. It allowed recordings of Skype voice over IP voice calls and teleconferences to be used as podcasts. Skypecasting remained in beta until it was discontinued on 1 September 2008. Skypecasts hosted public conference calls for up to 100 people at a time. Unlike ordinary Skype p2p conference calls, Skypecasts supported moderation features suitable for panel discussions, lectures, and town hall forums. Skype operated a directory of public Skypecasts. Throughout 2007, updates (3.1, 3.2, and 3.5) added new features including Skype Find, Skype Prime, Send Money (which allowed users to send money via PayPal from one Skype user to another), video in mood, inclusion of video content in chat, call transfer to another person or a group, and auto-redial. Skype 2.7.0.49 (beta) for Mac OS X released adding availability of contacts in the Mac Address Book to the Skype contact list, auto redial, contact groups, public chat creation, and an in-window volume slider in the call window. During several days in August, Skype users were unable to connect to full Skype network in many countries because of a Skype system-wide crash which was the result of exceptional number of logins after a Windows patch reboot ("Patch Tuesday"). In November, there was controversy when it was announced that users allocated certain London 020 numbers (specifically those beginning '7870') would lose them, after negotiations with the provider of this batch of numbers broke down. By early 2008, the tumultuous ownership relations between the founders and eBay had resulted in significant leadership churn, with a succession of Skype presidents including Niklas Zennström, Rajiv Dutta, Alex Kazim, Niklas Zennström (again), and Henry Gomez, all holding that title at various points between 2005 and 2007. The business had failed to meet certain earn-out targets, growth was decelerating, product development had slowed significantly, and in October 2007 eBay took a $1.4 billion 'impairment' on the value of Skype, admitting it had overpaid, and now valuing the company at about $2.7 billion. In October 2008, analysis revealed TOM-skype — the Chinese version of Skype run by TOM Online — sent content of text messages and encryption keys to monitoring servers.
… excerpt ends here. Continue reading the full article.
