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In April, Microsoft announced that it will acquire Nuance Communications for about $19.7 billion. This deal got approval from various government agencies including the U.S SEC. Today, the European Commission has approved the deal unconditionally since the transaction would raise no competition concerns.
During its investigation, the Commission examined the following:
- The horizontal overlaps between the activities of Nuance and Microsoft in the markets for transcription software. The Commission found that Microsoft and Nuance offer very different products. While Nuance offers mostly out-of-the-box solutions to end-users, Microsoft provides application programming interfaces (‘APIs’) as part of its Azure Cognitive Services that developers can use to integrate speech recognition technology into their programmes. Furthermore, the Commission considers that the combined entity will continue to face strong competition from other players.
- The vertical link between Microsoft’s cloud computing and Nuance’s downstream transcription software for healthcare. The Commission’s market investigation showed that competing transcription service providers in healthcare do not depend on Microsoft for cloud computing services and transcription service providers in the healthcare sector are not particularly important users of cloud computing services and.
- The conglomerate links between Nuance’s transcription software products and a number of Microsoft’s products. The Commission found that the combined entity would not have the ability and/or incentive to foreclose its competitors in the markets for (healthcare) transcription software, enterprise communication services, customer relationship management software, productivity software and PC operating systems. Windows is currently in any event the only PC operating system for which Nuance’s transcription software is available. Finally, the combined entity will continue to face strong competition from other players.
- The use of data transcribed with Nuance’s software. The Commission concluded that Nuance can use this data only to provide its services. It is not used by any other company and cannot be used for any other purpose due to contractual restrictions and data protection legislation. Also, access to such data does not provide an advantage that would allow Microsoft to shut out competing healthcare software providers given that important transcribed information is typically stored in third-party applications like electronic health record systems that combine data from several sources, as opposed to Nuance’s fragmented speech data.
UK’s Competition and Markets Authority (CMA) recently announced that it is investigating the anticipated acquisition by Microsoft Corporation of Nuance Communications, Inc. CMA is expected to close its investigation in January. Going by this timeline, we can expect Microsoft to complete this acquisition by Feb 2022.