Microsoft in Talks to Acquire Chat Startup Discord in a Business Deal Worth Over $10 Billion — Reports

By Avi Ben Ezra Tuesday, March 23, 2021

Tech business titan Microsoft is reportedly in talks to acquire messaging startup Discord in a deal worth more than $10 billion.

Microsoft headquarters in Prague.

Another Bet on the Rising Gaming Industry

Bloomberg has reported this morning that Microsoft is one of the companies engaged in talks with Discord. At this stage, no deal is imminent, as the video game company also considers going public. The report adds that there is a higher chance that the chat startup goes public than sell its business to another company.

“Microsoft possibly acquiring Discord makes a lot of sense as it continues to reshape its gaming business more toward software and services. There’s a big opportunity to bundle Discord’s premium offering, Nitro, into the Game Pass service to drive more subscriptions from the last reported 18 million,” said Bloomberg Intelligence analyst Matthew Kanterman.

This report came just a few hours after VentureBeat reported that Discord is talking to multiple suitors to sell its communications and chat platform in a business deal worth over $10 billion. Accordingly, the messaging startup decided to engage in talks with interested parties after multiple companies showed their interest in acquiring the business.

“I know they are in active discussions with a select few parties. The market is in a state where they could command strong double-digit billions of dollars,” a source was quoted by VentureBeat.

The VentureBeat story goes a step further and cites a source that the chat company has already signed an exclusive acquisition discussion with one of the interested parties as it entered into the final negotiation phase. It is unclear at this moment whether this party is Microsoft.

The chat startup was valued at $7 billion just three months ago when it was successful in raising $100 million, the same amount the company raised in June last year. In December last year, it was reported that Discord’s user base has grown to over 140 million people.

“We are excited about what we have in store and plan to use this funding to help make Discord even better — both for our free service and our Nitro subscribers,” said Jason Citron, CEO of the company, in a statement following the successful fundraising campaign conducted in December last year.

The chat startup, which had a business valuation of $1.65 billion in 2018, has raised nearly half a billion in funding so far. Earlier this month, the Wall Street Journal reported that Discord generated $130 million in revenue in 2020, representing an increase of almost 200% compared to the $45 million generated in 2019. The company is yet to turn profitable, the WSJ story adds.

Startup Savant recently reported that Microsoft, which owns one of the most popular video game consoles, Xbox, spent $7.5 billion in cash to acquire Bethesda and ZeniMax Media as the company moved to grow its consumer entertainment division.

“We expect Xbox to remain acquisitive to keep bolstering the value proposition of Game Pass and drive subscriptions higher,” Kanterman added.

Summary

Chat startup Discord is reportedly in talks with multiple parties to sell its popular messaging platform, with Microsoft being one of the businesses engaged in talks with the company.

About the Author


Headshot for author Avi Ben Ezra

Avi Ben Ezra is the Chief Technology Officer (CTO) and Cofounder of SnatchBot and SnatchApp (Snatch Group Limited). He leads the Group’s long-term technology vision and is responsible for running all facets of the tech business which includes being the architect of the platforms and UI interfaces.

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