Why Microsoft wants Discord – The Verge

Microsoft is arguing with Discord to purchase the communications application. Wall Street Newspaper reports that Microsoft is in “exclusive negotiations” to acquire Discord, and a deal could be closed next month. It is the latest acquisition target from Microsoft, after the company failed to acquire TikTok and Pinterest recently. Although all three are very different services, they share a common element: community.

Microsoft is willing to spend a lot on these services because, outside of the Xbox, it does not have a large consumer-oriented community like rivals Google, Amazon, Facebook and Apple. Microsoft saw Google acquire YouTube and make it the largest video platform in the world, Amazon buy Twitch and dominate streaming, Facebook acquire Instagram and WhatsApp to control the way millions of people communicate and socialize online and Apple runs mobile devices with its App Store.

Discord gives Microsoft access to a growing list of more than 140 million monthly active users, which includes thousands of the best YouTubers, creators and players. Microsoft wants its own community.

A community of creators

“Creation, creation, creation – the next 10 years will be as much about creation as it is about consumption and about the community around you, so it is not creating alone,” said Microsoft CEO Satya Nadella, in an interview with Bloomberg last month. “If the last 10 years have been about consumption – we are buying more, we are browsing more, we are watching more – there is creation behind each one of them.”

Nadella quickly focused on creators and communities in the first year as CEO of Microsoft. One of his first major acquisitions was Mojang, the studio behind Minecraft with its millions of dedicated fans. Nadella also spent a lot to acquire other communities, with LinkedIn costing $ 26.2 billion and GitHub for $ 7.5 billion. GitHub was an important target to buy developer love and a huge community, and LinkedIn connected Microsoft more deeply to companies and provided access to a meaningful professional social graph.

Microsoft is clearly looking for the same type of community led by creators on the consumer side, but TikTok and Pinterest didn’t work. The software manufacturer also failed elsewhere. Microsoft acquired Beam a few years after Nadella was named CEO and eventually renamed it to its streaming service Mixer. Microsoft tried to compete with Twitch, but ended up failing because it did not have a wide consumer reach. Instead, he closed the Mixer last year and helped make the transition from streamers to Facebook Gaming.

Discord offers Microsoft a large and engaged community. Used mainly by gamers, it has become a Generation Z hub for socializing with friends, especially during the pandemic. It consists predominantly of private communities and Discord has 6.7 million active servers every day. It is a huge community, 75 percent of whom are Discord users outside of North America.

It has also become an essential tool for many in the past year. I personally used Discord daily to keep in touch with friends or participated in remote movie nights, streamed games and just used the app as a place to hang out. Millions use Fifteen days to hang out and play together, and Discord is the primary way these communities of friends chat and chat while they play.

Discord is a great mix of Slack messages and zoomed video, combined with the unique ability to enter audio calls freely. You do not need to organize a time to call friends or send links to them, just enter and leave the voice channels that are always ready and open.

Image: Discord

Azure and Xbox

The community and creator aspects of the potential acquisition of Microsoft’s Discord are clear, but the company is also driven by its desire to have great public services running on Azure. It is an area where Microsoft has lagged behind rival Amazon Web Services (AWS), and is particularly relevant when you consider that Discord is based on Google Cloud. Microsoft and Google are fighting each other again, so the migration from Discord to Azure would be seen as a major victory for their ambitions in the cloud.

Microsoft also made the transition Minecraft from AWS to Azure recently, and the company quickly moved Outlook to iOS (part of its Acompli acquisition) from AWS years ago. Having a large platform like Discord, TikTok or Pinterest running on Azure allows Microsoft’s huge sales force to sell more business when making the change.

Discord also has growth potential for Microsoft beyond the cloud. Discord raised $ 100 million last year to try to go beyond gambling and attract artistic communities, sports networks, school clubs and more. It all sounds very similar to what Microsoft is trying to do with Microsoft Teams for personal use, after the company struggled to have its own Zoom moment with Skype.

However, Discord leaves Microsoft with moderation headaches. Discord created a task force to combat hate speech in the service last year, alongside improving its own racial equality efforts. Like many social networks, he had to fight toxic users, bots and groups that use the service to hack, organized hatred and other nefarious activities. Discord benefits from the fact that it does not try to amplify content to keep users engaged, such as Twitter, Facebook or YouTube. Microsoft has a lot of experience handling moderation on its Xbox Live network, and the company has been on a mission to combat gaming toxicity in recent years.

If Microsoft succeeds in its acquisition attempt, the crossings between Discord and Xbox are obvious. Xbox boss Phil Spencer had previously discussed the importance of Discord as a place “where people come together to chat about games, watch games, watch others play”. It should have been the Mixer, but the user base was not there. The acquisition of Discord could tighten the integration between Xbox, PC and Discord, at a time when consoles are basically turning into powerful PCs.

Spencer has been open to “cross-talk” between Xbox Party Chat and Discord for years, and it is reasonable to assume that it would be a priority for Microsoft to bring Discord to Xbox if a deal went ahead. This type of integration would only make the Xbox more attractive than the PlayStation, in the same way that Microsoft’s $ 7.5 billion acquisition of Bethesda was designed to boost the Xbox Game Pass with exclusive games.

In addition, I think Microsoft has learned to let its successful acquisitions flourish independently. Skype is a solid example of what goes wrong when Microsoft tries to integrate a complicated service into its vast network of software and services, but GitHub, LinkedIn and Mojang have remained largely independent. Microsoft wants Discord because of its active user base; the last thing you need to do is irritate a community of millions.