SAN FRANCISCO – Discord, a social media company popular with gamers, has entered into negotiations with Microsoft for a deal that could amount to $ 10 billion, according to people who inform the situation.
The talks were preliminary and no agreement is imminent, said one of the people who did not want to be identified because the discussions were confidential. The talks took place as video games rose in the pandemic, and Microsoft, one of the world’s most valuable technology companies, strengthened its gambling business by making transactions.
Many of Microsoft’s acquisitions in recent years have focused on online communities, such as the acquisitions of LinkedIn, GitHub and the game developer created by Minecraft. Last summer, Microsoft was in talks to buy the video app TikTok in an instant acquisition; the discussions later fall apart. In September, Microsoft also bought ZeniMax Media, the parent company of several major gaming studios, for $ 7.5 billion.
Discord, which counts more than one hundred million monthly active users, was very popular in the pandemic because people used the service to chat with each other while playing games. The San Francisco-based company, which has raised nearly $ 600 million in funding since 2014, has held preliminary talks with various suitors over the years, another person with knowledge said.
The private company, which valued investors at $ 7 billion in December, is also a candidate to go public. This month, Discord hired its first chief financial officer, a sign that he may be preparing for an initial public offering.
Spokesmen for Microsoft and Discord declined to comment. VentureBeat reported earlier that Discord discussed transactions, and Bloomberg reported Microsoft’s involvement.
Joost van Dreunen, a professor at New York University who studies the video game business, said that if an agreement were reached, Discord would ‘naturally fit’ with Microsoft’s Xbox video game business. He said Microsoft “built hardware, bought software and now stitches everything together with the connective tissue of a community layer.”
Microsoft has said it wants to make it easier for people to play games on their Xbox consoles or on their phones on the go. In the last three months of 2020, its gambling industry generated revenue of $ 5 billion for the first time since the release of new Xbox consoles.
Discord was founded in 2015 by Jason Citron and Stan Vishnevskiy, programmers and entrepreneurs, as a platform for video games to chat and socialize while playing. It mainly attracted attention as a gathering for the far right, which Discord used to organize the white nationalist Charlottesville, Va., In 2017.
Discord has since implemented stricter rules for content moderation and banned all-right communities. The app, which allows people to create private servers – essentially small communities – includes audio, text and video chat options.
Last year, Discord announced plans to go beyond everyday use among online groups of all kinds. It is used for activities such as university classes and organizing events such as the Black Lives Matter protests.
The company crossed $ 100 million in revenue last year, one of the people said. Discord makes money by selling subscribers on a premium version of the service.