Microsoft is reportedly buying AI speech firm Nuance for $19.7 billion, boosting Microsoft’s capabilities in voice recognition software and offering the company greater leverage in healthcare. Nuance has a stake in healthcare that Microsoft gets access to with the purchase. Microsoft are paying $56 per share for Nuance, roughly 23% more than the closing price on Friday. Microsoft will acquire the company’s net debt as part of the deal.
Nuance is known for the Dragon brand of speech recognition software. Dragon uses deep learning to transcribe speech and improve accuracy over time by learning to adapt to how users speak. Nuance has licensed use of the technology for many applications and services, most notably Siri; though it’s unclear how much Siri relies on Dragon to answer questions. Regardless, Dragon is an industry leader for transcription software and accuracy.
The new $19.7 billion acquisition is the second-largest purchase by Microsoft, after the purchase of LinkedIn in 2016. Microsoft purchased the professional social network for $26 billion. The purchase comes when speech tech is exploding in use and quality, thanks to the explosion of deep learning in AI. There are many potential opportunities to use the technology as well, fueling the need for advancement.
Digital transcription tools are becoming more reliable in a range of uses, across board meetings, university lectures, and medical consultations. The boost in remote work also brings new opportunities for automatic transcription. Tools like Zoom rely on automatic transcription to put subtitles in calls.
Microsoft gets roughly two-thirds of its revenue from cloud computing and enterprise software. Better transaction services make sense for the company given where the money comes from. Microsoft could integrate Nuance into existing software solutions such as Teams or make it a separate part of the Azure cloud services.
For now, Microsoft plans to focus on healthcare. Microsoft and Nuance have worked together before in healthcare. The two companies announced a “strategic partnership” in 2019 where Microsoft used Nuance to digitize client health records.