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Microsoft Corp. is in advanced negotiations to acquire the messaging platform Discord Inc. for $ 10 billion or more, according to people familiar with the matter, while the software giant seeks to deepen its consumer offerings.
Microsoft and Discord are in exclusive negotiations and may close a deal next month, as long as the negotiations do not fall apart, people said.
Originally preferred by gamers, the San Francisco-based Discord offers voice, text and video chat. The platform’s popularity has increased since the pandemic, as people stay at home and connect online – just like those of other chat services like WhatsApp and Signal Messenger LLC from Facebook Inc ..
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Microsoft, which has a market value of more than $ 1.7 trillion, is looking for an acquisition that will help it reach more consumers. Last summer, she held talks to buy the popular video-sharing app TikTok amid a high-profile geopolitical stalemate caused by the Trump administration, before abandoning the effort.
VentureBeat reported this week that Discord was exploring a sale and entered into exclusive discussions with an unidentified suitor.
The purchase of the six-year-old startup could help Microsoft boost both its video game business, which includes the successful Xbox gaming platform, and its presence on social media.
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Their efforts to scale up on social media are stalling. In addition to TikTok’s unsuccessful negotiations last year, Microsoft gave up Mixer, its live video game service that was struggling to compete with companies like Amazon.com Inc.’s Twitch, YouTube and Alphabet Inc.’s Facebook Gaming.
If a deal is closed, it would be the largest acquisition by Microsoft based in Redmond, Wash. Since the $ 26.6 billion purchase of LinkedIn Corp. in 2016. The technology giant has made a series of acquisitions in recent years, including the purchase of software for $ 7.5 billion – development of the GitHub Inc. platform in 2018 and its purchase for $ 7.5 billion from the video game ZeniMax Media Inc., which closed earlier this year.
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Discord started in 2015 as a platform that made it easy for video game enthusiasts to chat while playing online games together. It now has about 140 million monthly users and, while many newcomers have formed communities dedicated to a variety of non-game topics, it remains a hot spot for players looking to connect online. Users say it offers higher-quality audio than other chat services, including even Microsoft’s Xbox and Skype, owned by Microsoft.
Discord’s growth jumped last year, with its valuation doubling to $ 7 billion after a financing round in December. It generated $ 130 million in revenue in 2020, up from nearly $ 45 million in 2019, although it is not yet profitable, The Wall Street Journal reported. In a move that laid the foundation for a potential IPO, Discord last week hired his first chief financial officer, Tomasz Marcinkowski, a former Pinterest Inc. executive.