Microsoft buys AI speech firm Nuance for $19.7 billion

The acquisition will combine solutions and expertise to deliver new cloud and AI capabilities across healthcare and other industries, the Redmond-based company noted.

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Microsoft said on Monday it has agreed to buy Nuance Communications, a cloud and artificial intelligence (AI) software firm, in an all-cash transaction valued at $19.7 billion, including debt.

The acquisition will combine solutions and expertise to deliver new cloud and AI capabilities across healthcare and other industries, and represent the latest step in Microsoft’s industry-specific cloud strategy, the Redmond-based company noted.

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“Nuance provides the AI layer at the healthcare point of delivery and is a pioneer in the real-world application of enterprise AI,” Microsoft CEO Satya Nadella, said in a statement. “AI is technology’s most important priority, and healthcare is its most urgent application.”

Nuance’s products include multiple clinical speech recognition software as a service (SaaS) offerings built on Microsoft Azure. The firm’s solutions work with core healthcare systems, and are currently used in 77% of U.S. hospitals, it noted in a release.

Microsoft’s acquisition of Nuance builds upon the existing partnership between the firms that was announced in 2019, to help transform healthcare delivery. Last year, the software giant had introduced Microsoft Cloud for Healthcare to address the needs of the rapidly transforming and growing healthcare industry.

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“Together, with our partner ecosystem, we will put advanced AI solutions into the hands of professionals everywhere to drive better decision-making and create more meaningful connections, as we accelerate growth of Microsoft Cloud for Healthcare and Nuance,” Nadella said.

Beyond healthcare, Nuance provides AI expertise and customer engagement solutions across Interactive Voice Response, virtual assistants, and digital and biometric solutions.

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Mark Benjamin will continue as Nuances’ CEO, and will be report to Scott Guthrie, VP, Cloud & AI at Microsoft, the company noted.

The deal is intended to close by the end of this calendar year, and it would be Microsoft’s second-largest purchase after its 2016 acquisition of LinkedIn for $26.2 billion. Last month, Microsoft acquired ZeniMax Media for $ 7.5 billion.

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