Microsoft Discord Deal Collapsed: A Big Set Back For Microsoft?

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Microsoft for long has been wanting to strike gold by owning a consumer tech product. However, as luck would have it, they keep failing at it.

According to the latest media reports, it has been found out that Discord Inc, the messaging platform, has ended discussions with Microsoft corp and now plans to focus on expanding their business as a standalone company.

Sources familiar with the development said Discord would be shifting its efforts to build the chat platform and monetize its growing user base. But that’s not all.

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The people in the know also revealed that there might be a public listing on the cards for the messaging company. However, it is not imminent.

In March, Microsoft was in talks to buy a 100% stake in Discord for more than a whopping $10 billion. And given how social networking grew at a tremendous pace during the onset of the COVID-19 pandemic along with online gaming, it was definitely a suitable bet for the Redmond, Washington based tech giant.

Discord’s platform allows both public and private groups to gather and chat online via text, audio and video. It started as an online hangout spot for gamers but soon expanded to including sports fans, music groups, crypto enthusiasts, and much more.

Currently, Discord, with its 140 million user base, stands out prominently in the social networking space where bigwigs such as Twitter and Facebook IInc reply on advertising for the bulk of their entire revenue.

The San Francisco-based messaging company grew its revenue to $130 million in 2020 by offering its users Nitro premium subscriptions (costing 9.99 monthly or 99.99 annually), enabling features such as exclusive emojis, enhanced video resolution and more. In December 2020, Discord raised $100 million in a funding round from investors such as Greenoaks Capital and Index Ventures and got valued at $7 billion.

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Thus it is safe to say it was a huge disappointment for Microsoft, which could’ve leveraged Discord to compete with the likes of Facebook’s WhatsApp or Messenger. However, given Microsoft’s track record with consumer tech businesses, the fact that their talks with Discord failed to fructify is not exactly shocking.

Previously, Microsoft had also botched the Tiktok acquisition last summer. And before that, it had to pull out its A.I. assistant Cortana from competing against Alexa, Google Assistant and Siri. And if we go further back, we all know how the acquisition of Skype turned out. Therefore, it might be a good thing Microsoft couldn’t strike a deal with Discord.

All in all, the Redmond-based tech giant’s strengths lie in the enterprise software space and perhaps it is time the company focuses on doubling down on that. Recently, Microsoft acquired Nuance Communications, a technology firm, for $19.7 billion and hopes to pivot into the health tech sector. We will keep you updated on all future developments. Until then, stay tuned.

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