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On Monday it was announced that Microsoft is buying Nuance Communications Inc for $20 billion - $16 billion for the company and another $4 billion for its debt. This is their second biggest acquisition ever. The biggest was the $26 billion paid for LinkedIn in 2016.
Monday was the first time I had heard about Nuance, but it turns out I have been using their technology for years. Their code assisted in the creation of Apple's Siri. Since Siri, Nuance has focused on creating AI to assist doctors take notes during consultations. The AI transcribes each appointment, and then uploads the information to the client's file. From there another AI program can analyse the consultation to see if the doctor might have missed something.
Microsoft has two reasons for making this acquisition. The first is that they will probably take this technology and incorporate it across their existing product offering. Secondly, the healthcare industry is ripe for disruption. Microsoft has the brand, scale and cash to make that happen. Thinking about it, Microsoft should just write another cheque for $22 billion to buy Cerner, the company trying to digitise hospitals.
Microsoft has $130 billion in cash waiting to find a home. So spending $20 billion to open a new market for them makes sense. The share price reacted positively on the news.
