Discord Turns Down Microsoft Offer, Will Launch IPO

Posted on April 20, 2021 by Paul Thurrott in Cloud, Games, Xbox, Microsoft with 17 Comments

Bloomberg and The Wall Street Journal are independently reporting that Discord has turned down Microsoft’s acquisition offer and will launch an initial public offering (IPO) instead. The talks broke down after Discord rejected a $12 billion offer from the software giant.

Rumors of Microsoft’s interest in Discord first appeared in March, with The Wall Street Journal later reporting that Microsoft was in “exclusive” talks to buy the chat service just a few days later as other suitors like Epic Games and Amazon backed down. Microsoft was originally looking at spending about $10 billion on Discord, so it would appear that $12 billion was its best offer.

But even at the height of Microsoft’s activity, there were reports that Discord was just pumping up interest in the firm ahead of an IPO. And that now appears to be the case.

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Comments (17)

17 responses to “Discord Turns Down Microsoft Offer, Will Launch IPO”

  1. scovious

    Brace yourself for the advertisements and selling off of user data. I'll be taking a second look at Guilded.

  2. crunchyfrog

    In reply to Pungkuss: In many cases, these small companies position themselves to be hoovered up by big companies just to cash out for those at the top.

  3. crunchyfrog

    When I think of how Yahoo turned down Microsoft and Nokia accepted a Microsoft offer, maybe this is for the best.

  4. Indrek Ploompuu

    Microsoft already has all the technology, but Discord's userbase would have kickstarted a fading business category. In a way, Discord could have been the Microsoft Teams for consumers.

  5. marshalltm

    When this is trading for $3b market cap in 5 years, we will all think back to this moment. This is like Real Player or Point Cast or Yahoo or Rovia or Snapchat or Slack. The hottest hottest thing with growth curves to the moon. Then it is just a normal company with lots of competition.

    How Microsoft can monetize this is different than how they can monetize it themselves.

    • wright_is

      In reply to marshalltm:

      On the other hand, does it really need to be part of a big business? I think the stock market is so stuck on growth and bigger is better that it has lost track of sustainability and staying true to your roots.

      There are plenty of examples of products, where the company behind them are now part of something "bigger" (worth more on the stock exchange), yet the product has suffered as a result.

      LastPast springs to mind, as one of the most recent to faul foul of this race to sell out to the highest bidder and be gobbled up by a bigger entity. It has lost many of the "features" that made it so successful, such as sacrificing paying customers' privacy by sticking additional tracking domains into the code! This breaches the whole concept of trust that LastPass was built up on.

      • Chris_Kez

        In reply to wright_is:

        Agreed. It is a shame to see companies abandon their original mission in search of the almighty dollar. Then again, Discord has probably taken on a bunch of investors who are explicitly giving them capital in expectation of a large financial windfall. Founders sow the seeds when they go looking for VC money.

        • anoldamigauser

          In reply to Chris_Kez:

          I agree that it is a shame when a company changes its products and features in order to monetize their userbase; but I think the "original mission" is to make a ton of money. Certainly that is the goal of the VC investors and the founders.

          Very few people found companies in the hopes of earning a comfortable living. They are hoping for a windfall.

          • dbonds

            In reply to AnOldAmigaUser:

            $12b is a heck of a "windfall". ;-) Realizing that there are other debts to pay off, I suspect the original founders of Discord would of come out very well. Hope their IPO goes nearly as well financially for them as this would have.

            I suspect their decision was much more around the "control their own destiny" aspect than the financial aspect -- otherwise, we'd likely be reading about a deal being completed with MSFT.

        • brothernod

          In reply to Chris_Kez:

          I don't know, i was really excited about this so I could maybe finally post more than one image to a chat without having to pay extra.

  6. madthinus

    They wanted the biggest payday possible. So IPO it is.

    I wonder if Microsoft is really aggressive like they where with teams if they could replicate this internally.

    • Chris_Kez

      In reply to madthinus:

      What Microsoft can't replicate is the existing user base of Discord. They could make a clone, or even a slightly better version, but not replicate the penetration and engagement. See their failed Mixer experiment. They attached that to Windows and to Xbox and didn't go anywhere.

  7. jwpear

    Wow! I have no idea if this valuation was correct or not, but this kind of puts a bad taste in my mouth for the Discord team. This really felt like a good fit for both. Microsoft has gaming AND enterprise.

  8. j5

    Bye bye X-Cord :(