Microsoft Corp. is in advanced talks to acquire the Discord Inc. messaging platform for $ 10 billion or more, according to people familiar with the matter, as the software giant looks to deepen its consumer offerings.
Microsoft and Discord are in exclusive talks and could close a deal next month, assuming the negotiations don’t fall apart, the people said.
Originally favored by gamers, San Francisco-based Discord offers voice, text, and video chat. The popularity of the platform has increased since the pandemic took hold, as people stay home and connect online, as have other chat services such as Facebook Inc.’s WhatsApp and Signal Messenger LLC.
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Microsoft, which has a market value of more than $ 1.7 trillion, has been looking for an acquisition that will help it reach more consumers. Last summer, he held talks to buy the popular video-sharing app TikTok amid a high-profile geopolitical standoff sparked by the Trump administration, before abandoning the effort.
VentureBeat reported this week that Discord was exploring a sale and had entered into exclusive discussions with an anonymous suitor.
Buying the six-year-old startup could help Microsoft boost both its video game business, which includes the successful Xbox gaming platform, and its social media presence.
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His efforts to gain scale on social media have stalled. In addition to the fruitless TikTok conversations last year, Microsoft gave up Mixer, its video game live streaming service that was struggling to compete with companies like Amazon.com Inc.’s Twitch, Alphabet Inc.’s YouTube, and Facebook Gaming.
If a deal is struck, it would be the largest acquisition by Redmond, Washington-based Microsoft since the $ 26.6 billion purchase of LinkedIn Corp. in 2016. The tech giant has made a number of acquisitions in recent years, including the purchase of software for 7.5 billion dollars. -development platform GitHub Inc. in 2018 and its $ 7.5 billion purchase of video game company 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 together online. It now has around 140 million monthly users, and while many newcomers have formed communities dedicated to a variety of non-gaming topics, it is still a hotspot for gamers looking to connect with each other online. Users say it offers higher-quality audio than other chat services, including even Microsoft’s Xbox and Skype, which Microsoft also owns.
Discord’s growth soared last year, and its valuation doubled to $ 7 billion after a funding round in December. It generated $ 130 million in revenue in 2020, up from nearly $ 45 million in 2019, though it is still not profitable, The Wall Street Journal reported. In a move that set the stage for a potential IPO, Discord last week hired its first chief financial officer, Tomasz Marcinkowski, a former executive at Pinterest Inc.