Microsoft Is in Exclusive Talks to Acquire Discord -- Update
By Cara Lombardo and Maureen Farrell
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
Microsoft and Discord are in exclusive talks and could complete
a deal next month, assuming the negotiations don't fall apart, the
Originally favored by gamers, San Francisco-based Discord offers
voice, text and video chatting. The platform's popularity has
surged since the pandemic took hold as people stay home and connect
online -- as has that of other chat services like Facebook Inc.'s
WhatsApp and Signal Messenger LLC. Discord has been considering an
Microsoft, which has a market value of over $1.7 trillion, has
been on the hunt for an acquisition that would help it reach more
consumers. Last summer, it held talks to buy the popular
video-sharing app TikTok amid a high-profile geopolitical standoff
prompted by the Trump administration, before abandoning the
VentureBeat reported this week that Discord was exploring a sale
and had entered exclusive discussions with an unnamed suitor.
Buying the six-year-old startup could help Microsoft boost both
its videogame business, which includes the successful Xbox game
platform, and its social-networking footprint.
Its efforts to gain scale in social media have been halting. In
addition to the unsuccessful TikTok talks last year, Microsoft gave
up on Mixer, its videogame 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 its $26.6 billion purchase of
LinkedIn Corp. in 2016. The technology giant has made a series of
acquisitions in recent years, including its $7.5 billion purchase
of software-development platform GitHub Inc. in 2018 and its $7.5
billion purchase of videogame company ZeniMax Media Inc., which
closed earlier this year.
Discord got its start in 2015 as a platform that made it easy
for videogame 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 range of
topics unrelated to games, it remains a hot spot for gamers looking
to connect with one another 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 in the past year, with its valuation
doubling to $7 billion after a December funding round. It generated
$130 million in revenue in 2020, up from nearly $45 million in
2019, though it still isn't profitable, The Wall Street Journal has
reported. In a move that laid the groundwork for a potential IPO,
Discord last week hired its first finance chief, Tomasz
Marcinkowski, a former Pinterest Inc. executive.
--Sarah E. Needleman and Aaron Tilley contributed to this
Write to Cara Lombardo at firstname.lastname@example.org and Maureen
Farrell at email@example.com
(END) Dow Jones Newswires
March 25, 2021 20:11 ET (00:11 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.