SAN FRANCISCO – Discord, a social media company popular with gamers, has held deal negotiations with Microsoft on a transaction that could go up to $ 10 billion, according to people who have reported on situation.
The talks are preliminary and no deal is imminent, one of the anonymity said because the discussions were confidential. Negotiations took place as video games exploded during the pandemic and when Microsoft, one of the world’s most valuable technology companies, boosted its gaming business by doing deals.
Many of Microsoft’s acquisitions in recent years have focused on online communities, such as buying LinkedIn, GitHub, and the game developer that created Minecraft. Last summer, Microsoft negotiated to buy video app TikTok in the blockbuster acquisition; Discussions have since disintegrated. In September, Microsoft also bought ZeniMax Media, the parent company of several major gaming studios, for $ 7.5 billion.
Discord, which accounts for more than 100 million monthly active users, was hugely popular during the pandemic, as people used the service to chat with each other while playing games. Another person with knowledge of the matter said that the San Francisco-based company, which has raised nearly $ 600 million since 2014, has preliminary agreement negotiations with many different suitors.
The private company valued by investors at $ 7 billion in December is also a candidate for a listing. This month, Discord hired its first CFO, a sign that it may be preparing for an initial public offering.
Spokesmen for Microsoft and Discord declined to comment. VentureBeat has previously reported that Discord is holding deal discussions and Bloomberg is reporting Microsoft’s involvement.
Joost van Dreunen, a New York University professor who studies the video game business, says that if a deal happens, Discord “will be a natural fit” with the video game business. from Microsoft’s Xbox. Microsoft has “built the hardware, bought the software, and is now putting it all together using the topology of a community layer,” he said.
Microsoft says it wants to make it easier for people to play games at home on their Xbox consoles or on the go on their phones. In the last three months of 2020, their games business generated $ 5 billion in revenue for the first time, after the release of the new Xbox console.
Discord was founded in 2015 by Jason Citron and Stan Vishnevskiy, programmers and entrepreneurs, as a platform for video game players to chat and chat while gaming. It has garnered official attention as a gathering place for the far-right, who used Discord to hold the Charlottesville, Va., White nationalist rally in 2017.
Discord has implemented stricter content censorship rules and forbid communities from replacing rights. The app allows people to create private servers – small communities in essence – with audio, text, and video chat options.
Last year, Discord announced plans to expand out of the game to everyday use between online teams of all types. It has been used for activities such as university classes and for organizing events such as the Black Lives Matter rally.
One person said the company made $ 100 million in sales last year. Discord makes money by selling subscriptions to the premium version of the service.