There was LinkedIn, then GitHub, and if rumor holds true, they'll be Discord.
Yes, Microsoft, the Xbox maker and Windows, and Microsoft Office developer, wants to get into the social media business.
However, on closer inspection, Microsoft's forays into social media aren't that baffling. Since 2014, CEO Satya Nadella has been making a series of targeted acquisitions. At the start of his tenure in 2014, Microsoft snagged Minecraft maker Mojang and the array of servers and online communities that came with it. Two years later, Microsoft bought out LinkedIn, a social media platform where career-oriented individuals network and rub elbows. And in 2020, Microsoft tried and failed to bring TikTok under its social media umbrella.
Moves like these present a clear through line that aligns with Nadella's vision of the internet over the next decade. A community-centric internet, defined by people generating and sharing their content.
In this context, Microsoft's rumored discussions to buy out Discord suddenly make sense.
But why is Discord, a perennial black sheep among social media platforms, looking to align with a corporate behemoth like Microsoft?
It's believed that Discord and other gaming companies could be trying to cash in on the momentum generated by Roblox's
This isn't the first time Discord has courted potential buyers either. But in 2018, buyout negotiations ran aground when Discord refused to embrace third-party advertising. Since then, Discord has chosen to remain independent to "protect its values," according to VentureBeat.
So if advertising is off the table, how could Microsoft possibly make a potential $10 billion bet on Discord profitable?
Three words: Xbox Game Pass. Building up Game Pass subscribers has been at the heart of Microsoft's gaming strategy, as evidenced by its recent $7.5 billion buyout of ZeniMax.
"Microsoft possibly acquiring Discord makes a lot of sense as it continues to reshape its gaming business more toward software and services," said Bloomberg Intelligence Analyst Matthew Kanterman. "There's a big opportunity to bundle Discord's premium offering, Nitro, into the Game Pass service to drive more subscriptions from the last reported 18 million."
But despite these opportunities, there are challenges for Microsoft. Sure the company has some experience moderating Xbox Live sessions and Minecraft servers. But could Microsoft really manage the diverse and sometimes raucous communities that often spring up on Discord?
There's also the possibility that a Microsoft merger could tarnish Discord's reputation as a neutral space for gamers of all stripes. Something which could cause a decline in Discord's monthly active users.
However, Microsoft's negotiations with Discord are little more than a rumor at this point. But even if these theoretical talks with Discord fall through, you can expect Microsoft to be at the negotiating table the next time a hot social media property comes up for sale.