The UK competition regulator has opened an investigation into Microsoft’s proposed $16bn takeover of Nuance, the artificial intelligence and speech recognition firm best known for its work on Apple’s virtual assistant Siri, in its latest move to scrutinise the impact of deals struck by big tech.
The move by the Competition and Markets Authority (CMA) comes weeks after it ordered Facebook parent company Meta to sell the gif creation website Giphy, the first time the regulator has moved to block a deal struck by a major Silicon Valley company.
Microsoft moved to buyMassachusetts-based Nuance, which has a stock market value of almost $18bn, in April to build up its cloud computing operation for healthcare and business customers.
Nuance says that it works with more than three-quarters of US hospitals, and has also been used by the NHS in the UK, with the deal the second-largest in Microsoft’s history after the $26.2bn acquisition of LinkedIn five years ago.
“The CMA is considering whether it is or may be the case that this transaction, if carried into effect, will result in the creation of a relevant merger situation,” said the regulator. “And, if so, whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods and services.”
The CMA said it is inviting comments from interested parties and rivals as it assesses whether the deal warrants an in-depth investigation.
The deal has already been unconditionally cleared by regulators in the US and Australia. The European Commission has also been taking soundings from rivals, with a decision on whether to investigate expected as soon as this week. The commission is expected to clear the deal.
Nuance offers healthcare businesses and hospitals services including medical transcription, clinical speech recognition and medical imaging. Its technology has paid off during the pandemic as it cuts down on note taking, helping doctors and nurses reduce their exposure to coronavirus.
Microsoft has been in preliminary talks with the CMA, which now has 40 days to decide whether to launch an in-depth investigation, ahead of the formal request for approval of the deal.
Facebook has said it disagrees with the CMA’s decision ordering it to sell Giphy, which it acquired for $400m last year, and is considering an appeal.
The CMA is set to be given beefed up powers to investigate deals struck by Silicon Valley companies through a new dedicated digital markets unit, which also includes a new enforceable code of conduct in dealings with third parties such as publishers based on “fair trading and trust and transparency”. The government is yet to officially grant the DMU powers which requires parliamentary time for new legislation.
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