Microsoft buys AI speech technology company Nuance for $ 19.7 billion

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Microsoft is buying AI speech technology company Nuance for $ 19.7 billion, strengthening the Redmond, Washington-based tech giant’s ability in speech recognition and further impacting the healthcare market, where Nuance sells many products. Microsoft is paying $ 56 a share for Nuance, a 23 percent premium over Friday’s closing price. The deal includes Nuance’s net debt.

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 technology for many services and applications, including, most notably, Apple’s digital assistant Siri. (Although it’s unclear how much Siri currently relies on Dragon to answer user questions.) Dragon is the industry leader in transcription accuracy.

Nuance’s $ 19.7 billion acquisition is Microsoft’s second largest after its 2016 purchase of LinkedIn for $ 26 billion. It comes at a time when speech technology is rapidly improving, thanks to the deep learning tree in AI, while at the same time there are more options for its use.

Digital transcription has become more reliable in a variety of settings, from medical consultations to board meetings and university lectures. The increase in remote working has also created new opportunities. With so many meetings taking place over video, it’s easier to offer clients transcripts through software integrated directly into these conversations. For example, Zoom offers automatic transcription through integration with third-party services such as Otter.

For Microsoft, which derives about two-thirds of its revenue from business software and cloud computing sales, it makes perfect sense to improve its transcription services for scenarios like this one. The company could integrate Nuance’s technology into its existing software, such as Teams, or offer it independently as part of its Azure cloud operations.

However, the direct focus will be on healthcare, where the two companies have already collaborated. In 2019they announced a “strategic partnership” to use Nuance software to digitize medical records for Microsoft customers. Nuance health technology, including the Dragon Medical One platform, which is geared towards identifying medical terminology, is reportedly used by more than half a million physicians worldwide and in 77 percent of US hospitals.

“By extending the Microsoft Cloud for Healthcare with Nuance solutions and taking advantage of Nuance’s expertise and relationships with EHR system providers, Microsoft will be better able to empower healthcare providers using ambient clinical intelligence and other Microsoft cloud services, Microsoft said in a blog post.

“Nuance delivers the AI ​​layer to the point of delivery in healthcare and is a pioneer in the real-world application of enterprise AI,” said Satya Nadella, Microsoft CEO in a statement“AI is technology’s number one priority, and healthcare is its most urgent application. Together with our partner ecosystem, we will put advanced AI solutions in the hands of professionals everywhere to drive better decision-making and create more meaningful connections, as we accelerate the growth of Microsoft Cloud in Healthcare and Nuance. “

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