Microsoft Corp. is in advanced talks to acquire messaging platform Discord Inc. for $ 10 billion or more, according to people familiar with the matter, as the software giant seeks to deepen its consumer offerings.
Microsoft and Discord are in exclusive talks and can complete an agreement next month, provided the negotiations do not fall apart, the people said.
Originally favored by gamers, San Francisco-based Discord offers voice, text and video chat. The platform̵
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Microsoft, which has a market value of over $ 1.7 trillion, has been looking for an acquisition that will help it reach more consumers. Last summer, there were talks to buy the popular video sharing app TikTok in the middle of a high-profile geopolitical distance that was asked by the Trump administration, before they left the effort.
VentureBeat reported this week that Discord was investigating a sale and had entered into exclusive discussions with an unnamed suitor.
Buying the six-year-old startup could help Microsoft grow both its video game business, which includes the successful Xbox gaming platform, and its social media footprint.
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Work to increase the scale of social media has stopped. In addition to the failed TikTok talks last year, Microsoft gave up Mixer, its video game live streaming service that struggled to compete with the likes of Amazon.com Inc.’s Twitch, Alphabet Inc’s YouTube and Facebook Gaming.
Should a deal come together, it would be Redmond, Wash.-based Microsoft’s largest acquisition since the $ 26.6 billion acquisition of LinkedIn Corp in 2016. The technology giant has made a number of acquisitions in recent years, including the purchase of 7.5 software billion dollars. GitHub Inc.’s development platform in 2018 and the $ 7.5 billion acquisition of video game company ZeniMax Media Inc., which was 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 users every month, and while many newcomers have formed communities dedicated to a variety of non-gaming topics, it is still a popular site for players who want to connect with each other online. Users say it offers higher quality audio than other chat services, including even that of Microsoft’s Xbox and Skype, which Microsoft also owns.
Discord’s growth jumped last year, doubling its value to $ 7 billion after a round of financing in December. It generated $ 130 million in revenue in 2020, up from almost $ 45 million in 2019, although it is still not profitable, The Wall Street Journal reported. In a move that laid the groundwork for a potential IPO, Discord last week hired its first chief financial officer, Tomasz Marcinkowski, a former head of Pinterest Inc.