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Microsoft eyes Clubhouse market with Discord bid

Microsoft eyes Clubhouse market with Discord bid

Deal valuing chat app at $10 billion or more could be completed next month

Microsoft is in talks to acquireDiscord, the audio-focused chat platform first made popular among gamers which now boasts more than 140 million users.

Why it’s worth watching: Microsoft is looking for ways to build its consumerbase and buy-in by capitalizing on the community feel of audio-based chat platforms and video game forums.

  • According to a 2021 YouGov survey, 14% of US adult gamers who watch video game livestreams do so on Discord. Many also use it for voice chatting or podcasting purposes, preferring Discord’s audio quality to that of Microsoft-owned Skype.
  • The software giant is eager to anchor itself within the gaming community. It already owns Xbox, and clearly sees the advantage in owning the platform where players chat in real time about their Xbox escapades as well.

The bigger picture: Microsoft may be attempting to edge out Discord’s rival Clubhouse before the audio-chat app becomes profitable, and to beat other companies in the race to develop their own chat platforms. So far:

  • Salesforce bought Slack, and is working to pivot the app’s corporate messaging reputation into the social sphere.
  • True to form, Facebook took an imitative approach, and is expanding its existing Messenger Rooms chat functionality to look and operate very similar to Clubhouse.
  • And Twitter is following suit, preparing to launch Spaces where users can verbalize their hot takes to one another, without constraint of character limits.

What’s next: If acquisition efforts succeed, Microsoft will have an opportunity to capitalize on Discord’s mixed media functionality and grow the community-based platform beyond young people and gamers. But Microsoft may not be able to uphold Discord’s scrappy spirit, and risks corporatizing the app into a Frankensteined amalgam of Slack and Clubhouse.