Snowden's leaks showed that Skype allowed governments to wiretap its video calls since at least 2010, when those wiretaps were ingested into PRISM. That is before the Microsoft acquisition.
It amazes me that people parrot this conspiracy theory without doing 5 minutes of Google searching first before making themselves look silly.
Quality was good and calls didn't drop, but the mobile support was poor. The original design assumed that it can use both cpu time and bandwidth of peers, and that isn't very good for devices on battery and metered data plans.
And it meant that random users' computers were being drafted into running a supernode and relaying traffic for other users, without permission or even any notice. Not only did this consume CPU time and bandwidth on the affected users' computers, but it also put anyone running a supernode in a position to observe and tamper with network traffic between other users.
End-to-end encryption reduces what an attacker in this position would be able to do, but it doesn't make the situation safe. Even if they can't observe or directly tamper with the data they're relaying, they can still observe metadata, like who the peers are and how much bandwidth is being relayed. Even just measuring the pattern of packet sizes can be disturbingly revealing:
https://news.ycombinator.com/item?id=18411779