Updated on March 4, 2022
Microsoft has completed its $19.7 billion acquisition of speech recognition company Nuance Communications.
Going forward, Microsoft and Nuance plan to provide customers across industries including healthcare, finance, retail and telecommunications with cloud products featuring "vertically-optimized AI," according to a press release.
"Completion of this significant and strategic acquisition brings together Nuance's best-in-class conversational AI and ambient intelligence with Microsoft's secure and trusted industry cloud offerings," Scott Guthrie, executive vice president of the Cloud + AI Group at Microsoft, said in the press release.
The Microsoft-Nuance deal comes at a time when the U.S. government is placing added scrutiny on acquisitions, especially those made by big tech. But the U.S. government did not issue an objection before the deadline last June, according to a filing Nuance made to the U.S. Securities and Exchange Commission.
Analysts expressed no surprise at the lack of objection from the federal government, despite the growing scrutiny over tech giants' business practices. A major player in speech recognition and voice-to-text technology, Nuance is just one company in a noisy market, and Microsoft's acquisition of the company poses no anti-competitive threat, said Forrester analyst Art Schoeller.
"This is not an, 'Oh my God, Microsoft bought the last one, so now we've got a big bad antitrust thing going on,'" Schoeller said. "In the number of different categories Nuance plays in, there are enough competitors, so this isn't an antitrust thing."
The nearly $20 billion Microsoft plans to shell out for Nuance is indicative of the company's desire to build a voice recognition product, particularly for customer service, that can compete with the likes of Google Cloud's Contact Center AI and AWS' AI chatbot Amazon Lex.
Microsoft's strategic Nuance acquisition
In announcing its plans to acquire Nuance in April, Microsoft focused on the benefits Nuance will bring to its healthcare business. Nuance is a leading healthcare transcription service provider known for products such as the Dragon Ambient Experience (DAX), which records and transcribes patient-provider communication.
Yet Schoeller said the Nuance acquisition goes beyond healthcare and positions Microsoft to become a stronger competitor in other sectors such as customer service.
"Not all CRM vendors land the desktop in customer service operations," Schoeller said. "But Microsoft -- with Dynamics 365, with their unified communications capabilities with Teams, and now with speech recognition -- is starting to assemble a number of pieces to be a stronger player in the customer service space."
Andy ThuraiVice president and principal analyst, Constellation Research
Andy Thurai, vice president and principal analyst at Constellation Research, echoed the point, noting that the Nuance acquisition puts Microsoft in a "powerful position to dominate customer service, sales, marketing -- in almost any industry -- offered on a solid cloud foundation."
Thurai, who was also not surprised that the acquisition made it past antitrust scrutiny, said the crux of Microsoft's acquisition is to build out comprehensive AI services for customers.
"Microsoft's acquisition is not for natural language processing or speech recognition. They are looking to build an enterprise AI empire," Thurai said. "Combining Nuance's speech recognition capabilities with Microsoft's existing NLP, AI capabilities … puts them in an advantageous position to address the larger enterprise AI market."
Latest antitrust actions
Although Microsoft cleared a hurdle in the U.S., other tech giants have found themselves in the antitrust hot seat.
Google recently reached an antitrust settlement with French authorities over its global advertising practices. It will pay a $268 million fine and has committed to operate its ad business in France more fairly for digital publishers and advertisers, marking the first time Google has agreed to alter how it allows publishers and advertisers to use data and its tools in advertising.
The French Competition Authority investigation found that Google granted preferential treatment to its own technologies through its Ad Manager product.
"This sanction and these commitments will make it possible to re-establish a level playing field for all players, and the ability for publishers to make the most of their advertising space," Isabelle de Silva, president of the French Competition Authority, said in a news release.
Google's not the only big tech company being investigated by a global authority. The European Commission and the U.K. Competition and Markets Authority are looking into whether Facebook has gained an anti-competitive advantage for online advertising and online dating services based on how it collects and uses data.
In the U.S., Apple is awaiting a judicial decision from a recently concluded trial with Epic Games over its app store practices for developers -- something the European Commission is also investigating.
Makenzie Holland is a news writer covering big tech and federal regulation. Prior to joining TechTarget, she was a general reporter for the Wilmington Star-News and a crime and education reporter at the Wabash Plain Dealer.