The Financial Times reported on Friday that Microsoft is planning on closing the London offices of Skype, putting up to 400 jobs at risk. The closure is particularly cutting since Skype was founded in London in 2003, and acquired by Microsoft in 2011 for $8.5 billion. That made it the kind of tech success—at least in its heyday—that has been all too rare not only in the U.K., but across Europe.
Whatever its accomplishments, an anonymous source told FT that Skype has become “a shell of the company it once was.” Executives from the company’s early days have been steadily replaced with Microsoft staffers in recent years.
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The competitive environment has also inarguably shifted under Skype’s feet. Consumer long-distance VoIP calling has long been a pillar of its business, but the spread of mobile devices opened a huge channel for competitors. The iPhone’s FaceTime, introduced in 2011, must have given Skype execs heartburn. But last year’s addition of free, international VoIP calls to WhatsApp can only have been the fulfilment of a long-repressed nightmare.
Microsoft’s acquisition of Skype ultimately played out as a move to beef up its Lync business communications platform, which it has since rebranded Skype for Business and knit more tightly into Office. But that move ran smack into the 2013 launch of Slack—whose beautiful business solution helped make it by some measures the fastest-growing startup ever.
(Disclosure: the Fortune team uses Slack).
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There’s another possible factor here—the looming shadow of Brexit. As we’ve written before, the possibility of new immigration controls could put pressure on U.K.-based tech companies, which often rely on international talent. Microsoft may have decided it’s simply easier to move on—and other companies may make the same decision.
In a statement to FT, Microsoft said it is “deeply committed to doing everything we can to help those impacted through the process” of the closure.
