Microsoft Buys Nuance Communications for $19.7B

Officials announced Monday, April 12 that Microsoft Corp is buying Nuance Communications Inc. an AI company specializing in voice recognition and related software and services for $19.7 billion. This latest Nuance acquisition becomes Microsoft’s second-largest acquisition in corporate history after LinkedIn which Microsoft bought in 2016 for $26.2 billion and it comes a day after a report emerged claiming that the two companies were in “advanced talks.”

Nuance is best known for its Dragon software, which uses deep learning to transcribe speech and improves its accuracy over time by adapting to a user’s voice. Nuance has licensed this tech for many services and applications, including, most famously, Apple’s digital assistant Siri. (Though to what degree Siri currently relies on Dragon to answer users’ queries is unclear.) Dragon is an industry leader in terms of transcription accuracy.

In regards to the leadership at Nuance Communications, Microsoft has abundantly put it clear that Mark Benjamin will still remain as Chief Executive Officer (CEO) of Nuance, reporting to Microsoft Executive Vice President of Cloud & AI Scott Guthrie. Microsoft officials also reiterated that the transaction is intended to close this calendar year.

The synergies between the two companies are fairly clear. Nuance develops cloud and AI software and services with a strong focus on healthcare and enterprise customers. Microsoft recently announced the Microsoft Cloud for Healthcare bundle and has invested heavily in the healthcare space over the past decade.

In 2019, Nuance and Microsoft announced a strategic partnership to deliver ambient clinical intelligence (ACI) technologies. The two said they’d work together on combining the Dragon Medical platform with Azure, Azure AI services, and ProjectEmpowerMD intelligent-scribe service, along with various other conversational AI technologies developed by the two companies. Last fall, the two companies said Nuance’s Dragon Ambient eXperience ACI solution had been integrated with Microsoft Teams.   

News of the Nuance acquisition was first reported over the weekend by Bloomberg, and it’s the latest example of Microsoft’s purchasing spree. Last month, the company completed its $7.5 billion acquisition of games company ZeniMax. Last year, it was considering an acquisition of social video app TikTok, and the company is also reportedly in “exclusive talks” to purchase communications app Discord.