SAN FRANCISCO – Discord, a social media company popular with gamers, held talks with Microsoft for a transaction that could reach $ 10 billion, according to people informed of the situation.
The negotiations were preliminary and no agreement is imminent, said one of the people, who declined to be identified because the discussions are confidential. The negotiations took place at the moment video games exploded in the pandemic and Microsoft, one of the most valuable technology companies in the world, strengthened its gaming business by doing business.
Many of Microsoft’s acquisitions in recent years have focused on online communities, such as purchases from LinkedIn, GitHub and the game developer who created Minecraft. Last summer, Microsoft was in talks to buy the TikTok video app in what would have been a highly successful acquisition; the discussions later collapsed. In September, Microsoft also bought ZeniMax Media, the parent company of several major game studios, for $ 7.5 billion.
Discord, which has more than 100 million active users per month, is very popular in the pandemic, as people use the service to chat while they play. The San Francisco-based company, which has raised nearly $ 600 million in funding since 2014, has had preliminary negotiations with several suitors over the years, said another person with knowledge of the matter.
The private company, whose investors valued at $ 7 billion in December, is also a candidate to go public. This month, Discord hired its first chief financial officer, a sign that it may be preparing for an initial public offering.
Spokesmen for Microsoft and Discord declined to comment. VentureBeat previously reported that Discord was discussing an agreement, and Bloomberg reported Microsoft’s involvement.
Joost van Dreunen, a professor at New York University who studies the video game business, said that if a deal was made, Discord would “fit naturally” into Microsoft’s Xbox video game business. He said that Microsoft has “built hardware, bought software and is now putting it together with the connective tissue of a layer of the community”.
Microsoft said it wants to make it easier for people to play games at home on their Xbox consoles or on the go on their phones. In the last three months of 2020, its gaming business generated $ 5 billion in revenue for the first time after the launch of new Xbox consoles.
Discord was founded in 2015 by Jason Citron and Stan Vishnevskiy, programmers and entrepreneurs, as a platform for video game players to chat and have fun while playing. It gained public attention as a meeting place for the far right, which used Discord to organize the white nationalist rally in Charlottesville, Virginia, in 2017.
Since then, Discord has implemented stricter content moderation rules and banned alternative rights communities. The application, which allows people to create private servers – in essence, small communities – offers audio, text and video options for chat.
Last year, Discord announced plans to expand beyond games for daily use among online groups of all types. It has been used for activities like college classes and organizing events like the Black Lives Matter protests.
The company exceeded $ 100 million in revenue last year, one person said. Discord makes money by selling subscriptions to a premium version of the service.