Skype’s Acquisition of GroupMe Gives Microsoft A Social Life

Skype plans to acquire popular group-messaging service GroupMe for a rumored $85 million. But more important than how GroupMe will benefit Skype is how it will benefit Microsoft, which is in the process of acquiring Skype for $8.5 billion.

Skype’s Acquisition of GroupMe Gives Microsoft A Social Life


The reaction to Skype’s proposed acquisition of the New York City-based group messaging service GroupMe for a rumored $85 million has been nearly universal: Good for Skype. It’s the latest in a string of high-profile gambits in the world of social grouping technology. Google+ has made Circles central to its social efforts. Apple has announced plans to launch its own group service, iMessage. And Mark Zuckerberg, whose company recently acquired the group messaging service Belugahas called grouping friends “the biggest problem in social networking.”

In all that excitement it’s easy to overlook the fact that Skype is also in the process of being acquired by Microsoft for $8.5 billion. That means any decision Skype makes should be viewed as a decision Microsoft would make as well. And Microsoft was well aware of Skype’s acquisition of GroupMe, Sandhya Venkatachalam, Skype’s head of corporate development, tells Fast Company. There was visibility at all levels of Microsoft including CEO Steve Ballmer. “This is something that’s very important for Skype and for our mobile and overall social strategy,” says Venkatachalam. “Of course, if and when the acquisition with Microsoft closes, we want to bring this functionality and this strategy to Microsoft and their mobile offerings.” 

Which means you can expect GroupMe to play a prominent role in Microsoft’s social efforts as well. 

When I recently spoke to Skype product VP Neil Stevens, he spoke at length about how Skype would become central to Microsoft’s mobile efforts. He described how Skype will add deep integration with Windows Phone, at a greater level than with any other mobile OS, and how it will become a unifying force between various Microsoft products such as Windows, Windows Mobile, and Xbox.

Core to GroupMe’s appeal is its ability to solve the “sharing problem” by better classifying our relationships. Social graphs in the digital world are incredibly messy: We have “friends” on Facebook the same as we have “followers” on Twitter–they’re not classified by close friends or distant cousins or mortal enemies, making sharing on social networks a giant headache and huge liability. (That is, you wouldn’t want to share the same status updates, check-ins, and photos with your roommate as you would with your boss.)

Classifying relationships is GroupMe’s speciality. When asked whether its friend-grouping functionality was just as important as the group messaging service itself, Venkatachalam says “absolutely,” adding, “We feel that having an easy way to create these groups, share information, and do it in the private and trusted way is absolutely the differentiator here.”


That could help Microsoft bolster its Windows Mobile OS in the future, adding better social and sharing features, in addition to Skype integration.

For now, GroupMe will remain a separate brand and product. It is, after all, one of New York’s most promising startups, having fended off a gaggle of competitors while growing to more than a million messages sent per day, and reportedly turned down an offer from Twitter for roughly $30 million. But the integration with Skype will happen sooner than later- for Skype it’s as much a product acquisition as a talent acquisition, since they’ll bring aboard twentysomething GroupMe cofounders Jared Hecht and Steve Martocci.

“We share a very similar vision, if not the same vision,” Hecht says. “We were on the exact same page when it came to what we really thought were important issues in social, the future of social–that being, helping people better interact with their intimate, real-life network. It was a no-brainer for us.”

And from his and Martocci’s perspective, the acquisition had nothing to do with competition heating up in the space, from Facebook, Apple, Google, and a slew of other startups. “This was not a reactionary decision,” says Hecht. “This was something that we’ve been talking about since March. We saw a shared vision, and a way to really attack and bring this space and our products to fruition. This was a very active decision; this wasn’t any kind of response to competition.”

[Image: Flickr user Kid Paparazzi]

About the author

Austin Carr writes about design and technology for Fast Company magazine.