Credited to Estonia. Skype was founded by a Swede and a Dane and registered in Luxembourg, so it is sometimes credited to Sweden or Denmark. The software itself was written and developed in Tallinn by Estonian engineers.
How it began
Skype was launched in Tallinn on August 29, 2003. The initiative came from two Scandinavian entrepreneurs, the Swede Niklas Zennström and the Dane Janus Friis, but the software was written by three Estonian developers who had been schoolmates: Ahti Heinla, Priit Kasesalu and Jaan Tallinn. A fourth Estonian, Toivo Annus, managed the first office and the core network engineering team. The company was registered in Luxembourg, but its largest office and main development team were in Tallinn.
Before it existed
The same team had earlier built Kazaa, a peer-to-peer file sharing program that became the most downloaded internet software in the world in 2003. After lawsuits from the music and film industries in the United States, Kazaa was sold. The group then realized that the same peer-to-peer technology could be used to make an internet phone. The working name was Skyper, from Sky Peer-to-Peer.
How it works
Skype let users talk by voice with a microphone, by video with a webcam, and by instant message over the internet. It originally used a hybrid peer-to-peer and client-server system, with a protocol similar to Kazaa's, which reduced the cost of carrying voice calls because users' own computers relayed traffic. In 2012 the relaying moved to machines hosted by Microsoft, and by 2017 the service had become a centralized cloud service.
What changed first
On its first day 10,000 people downloaded Skype, and a few months later it had a million users. eBay agreed to buy the company in September 2005 for about 2.5 billion US dollars. By the end of 2005 it had 74.7 million user accounts, and by the end of 2010 more than 660 million. Microsoft announced in May 2011 that it would buy Skype for 8.5 billion US dollars.
What lasted
Skype employees in Estonia held share options, so the eBay sale gave many of them capital to start companies. By one former executive's count, 36 people with a Skype background had founded businesses within ten years, among them the money transfer firm TransferWise. Estonian founders credit Skype with showing that a global product could be built from a small country.
Where it stands today
Microsoft retired Skype on May 5, 2025, and directed users to Microsoft Teams. As of 2011, most of the development team and 44 percent of the division's employees were still in Tallinn and Tartu. In 2023 the service was used by 36 million people each day.
