Messaging platform Discord Inc. has ended acquisition talks with Microsoft Inc. (NASDAQ: MSFT) as it plans to remain independent and pursue a potential IPO, the Wall Street Journal reported on Tuesday.
What happened: Microsoft was in advanced talks to buy fast-growing gaming communications startup Discord with a bid of approximately $ 10 billion. The tech giant was looking for bulk purchases to reach and acquire more consumers Nuance Communications Inc. (NASDAQ: NUAN) for $ 16 billion last week.
Microsoft was getting closer purchase Chinese social networking site TikTok for video sharing in the US, Canada, Australia and New Zealand grossed $ 20 to 30 billion last year.
San Francisco-based Discord was founded in 2015 and has held discussions with at least three other companies, the WSJ report reads. The social networking startup operates a free online platform to facilitate conversations via text, audio and video. It is especially popular with gamers.
Why it matters: Microsoft’s deal with Discord would have helped expand its social media presence beyond the gaming businesses of LinkedIn Corp and Xbox. Discord users rely on the platform to communicate with each other while playing and find that it offers better audio and features than the competition, including Microsoft’s Xbox and Skype.
The startup claims it doubled its monthly user base to about 140 million last year when daily life went online amid the COVID-19 pandemic. The still-unprofitable company had sales of $ 130 million in 2020, up from nearly $ 45 million in 2019.
Several startups with connections to the video game industry have recently gone public, including developers Roblox Corp. (NYSE: RBLX) and Playtika Holding Corp. (NASDAQ: PLTK), Game hardware manufacturer Corsair Gaming Inc. (NASDAQ: CRSR) and game creation tool providers Unity Software Inc. (NYSE: U.).
Price action: Microsoft shares closed 0.19% at $ 258.26 on Tuesday.
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