Discord reportedly ends takeover talks with Microsoft

21 Apr 2021

Image: © sharafmaksumov/Stock.adobe.com

The chat and messaging start-up was in discussions to be acquired for $10bn but, according to reports, the talks have been fruitless.

Messaging platform Discord has reportedly ended talks with Microsoft over a possible $10bn acquisition deal.

The Wall Street Journal reported that Discord walked away from discussions, which first emerged last month, and will instead remain an independent company. Discord is also said to be considering an initial public offering somewhere down the line.

Discord, which has raised more than $470m from VCs including Greenoaks Capital and Index Ventures, is a chat and video messaging app that’s particularly popular among gamers. Its last funding round of $100m valued the company at around $7bn.

Microsoft recently came to the table with offers to buy the start-up as part of its shopping spree of late. The $2trn tech giant has been spending big on acquisitions, including the $7.5bn takeover of games maker Bethesda and most recently shelling out more than $19bn for voice-tech firm Nuance.

Discord stood out as an acquisition target given its strong user base and financials. According to Reuters, it has 140m users and last year generated $130m in revenue. Crucially, its revenue comes from monthly and annual subscriptions paid by users, rather than advertising like on most other social platforms.

Social media and messaging services have seen a spike in user activity over the last year or so as in-person socialising came to an end during the pandemic, making the likes of Discord appealing.

For Microsoft, it will likely turn its attentions elsewhere as it seeks more companies for takeover. The tech giant doesn’t appear to be reluctant to writing big cheques either, as evidenced by the recent Nuance deal, which was its second biggest acquisition after the $26bn takeover of LinkedIn in 2016.

Last year, Microsoft was one of the companies in the race to purchase TikTok’s US operations, which were put under pressure to be sold to an American owner by then US president Donald Trump.

Jonathan Keane is a freelance business and technology journalist based in Dublin