It's relatively easy these days to find critics of Skype, the popular online calling service that Microsoft acquired in 2011 for $8.5 billion. Former devotees routinely gripe on social media that the software has become too difficult to use. On the Apple App store and Google Play store, negative reviews of the smartphone app are piling up, citing everything from poor call quality to gluttonous battery demand.
In March tech investor and commentator Om Malik summarized the negativity by tweeting that Skype was “a turd of the highest quality” and directing his ire at its owner. “Way to ruin Skype and its experience. I was forced to use it today, but never again.”
Microsoft Corp. says the criticism is overblown and reflects, in part, people's grumpiness with software updates. There are also other factors undermining users’ affection for an internet tool that 15 years ago introduced the idea of making calls online, radically resetting the telecommunications landscape in the process.
Since acquiring Skype from private equity investors, Microsoft has refocused the online calling service on the corporate market, a change that has made Skype less intuitive and harder to use, prompting many Skypers to defect to similar services operated by Apple, Google, Facebook and Snap.
The company hasn’t updated the number of Skype users since 2016, when it put the total at 300 million. Some analysts suspect the numbers are flat at best, and two former employees describe a general sense of panic that they’re actually falling. The ex-Microsofters, who requested anonymity to discuss confidential statistics, say that as late as 2017 they never heard a figure higher than 300 million discussed internally.
Chief Executive Officer Satya Nadella has repeatedly said he wants the company’s products to be widely used and loved. By turning Skype into a key part of its lucrative Office suite for corporate customers, Microsoft is threatening what made it appealing to regular folks in the first place. “It is like Tim Tebow trying to be a baseball player,” Malik says. “The product is so confusing, kludgey and unusable.”
Founded in 2003 by a pair of Nordic entrepreneurs, Skype freed tens of millions of people from the tyranny of the phone companies by offering cheap overseas calls. Most chatted free, and Skype made money charging for prepaid calls to regular phones. The company has cycled through various owners, including EBay. By 2011, the company was controlled by a Silver Lake-led consortium of investors and shopping itself to potential acquirers including Google and Microsoft even as it prepared for an initial public offering.
Keen to reduce Microsoft’s reliance on the personal computer, former CEO Steve Ballmer saw in Skype an internet brand that was so popular it had become a verb. Having erred previously by acquiring No. 2 players to save money, Ballmer decided to buy the leading incumbent and pay a 40 percent premium over what Skype valued itself at the time.
“It was the biggest asset in the space at the time with the most recognized brand,” says Lori Wright, who joined the Skype team as general manager last year from video-conference rival BlueJeans. “It was an opportunistic way for Microsoft to enter into something that was going to be significant.”
After the acquisition, Microsoft executive and former Skype CFO Bill Koefoed was routinely reminded of Skype’s popularity as a way to make cheap, or free, international calls. He recalls identifying himself to immigration officers on business trips overseas and constantly hearing variations of: I use Skype to call my grandmother! “Skype was such an iconic brand,” he says.